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Auto Insurance PIP Expense Benefits Are Not Reduced by Chosen Deductibles or Co-Payments

May 23, 2023 | Written by: Jacob A. Papay, Jr., Esq. |

A New Jersey personal automobile insurance policy must provide Personal Injury Protection (“PIP”) benefits pursuant to NJSA 39:6A-1, et seq.  Pursuant to the statute, a standard PIP policy provides $250,000 in medical expense benefits to an eligible injured person for the treatment expenses from a qualifying automobile accident injury, subject to a $250 deductible and 20% co-payment of expenses from $251 to $5,000.  A purchaser of automobile insurance can reduce the premium costs of an automobile insurance policy by selecting statutorily permitted greater deductibles and specific lower limits of medical expense benefits.  NJSA 39:6-4.3.  An issue arose regarding whether the selected medical expense benefit limits were in addition to or diminished by the policy deductibles and co-payments.  A recent NJ Appellate Division opinion, involving two separate claims for medical expense benefits from separate New Jersey private passenger automobile insurance policies issued by Travelers, held both insured claimants’ chosen basic statutory minimum medical expense benefit of $15,000 per accident was not reduced by their chosen deductibles or co-payments.  Birmingham v. Travelers, (A-0429-21, decided March 31, 2023).

In Birmingham v. Travelers, two Travelers insureds injured in automobile accidents filed suit to compel Travelers to pay the full amount of their chosen statutory minimum medical expenses benefit of $15,000, after application of their respective chosen deductibles ($2500 and $250) and statutory 20% co-payment of medical expenses between the chosen deductibles and $5,000, plus counsel fees and costs. Each insured claimed statutory entitlement to the statutory minimum of $15,000 in medical expense benefits above the sum of their chosen deductibles and co-payments.  The insureds asserted there was nothing in their respective policies stating that the selected medical expenses limits were reduced by optional deductible and mandatory co-payments.  The insureds further argued the applicable Personal Injury Protection statutes and interpreting case law supported their assertion.

Travelers claimed the respective policy deductibles and co-payments reduced the claimants chosen $15,000 statutory minimum of medical expense benefits.  Travelers claimed the sum of the chosen deductible, co-payment, and amount payable by Travelers could not exceed the chosen $15,000 medical expense benefits.  Travelers claimed their position was the logical interpretation of the applicable statutes and case law.  Travelers asserted it was hypocritical not to reduce the $15,000 statutory minimum medical expense benefits limit because the insureds with higher deductibles would get more coverage available to pay expenses over $15,000 for less money than those who paid for the same statutory minimum benefit limits with lower deductibles.  Apparently, Travelers argued the reduced cost of the higher deductible premium polices was equal to or greater than the amount of the additional deductible.

The Appellate Division noted the PIP statute, and the Travelers policies did not expressly indicate the medical expense benefit limits were reduced by the applicable deductible and co-payments.  The Court further noted that even if Travelers policies expressly provided for a reduction in benefits for the amounts of the deductible and co-payments, the policy would conflict with the statute or require regulatory permission from the Department of Banking and Insurance.  The Court found the insureds’ position was consistent with the applicable case law and Travelers’ position was not.  Lastly, the Court dismissed without comment Travelers argument that not reducing the chosen medical expense benefit limits by the selected deductibles and co-payments would give more protection to those with higher deductibles for the same medical expense benefits limit.  Presumably, the court found Travelers did not prove the reduction in premiums for a higher deductible option were equal to or greater than the amount of the increased deductibles.

For reasons asserted in the opinion, the PIP medical expense benefits limit of a New Jersey personal automobile insurance policy is not reduced by the applicable policy deductible or co-payment.

Jacob Papay, Jr.


Jacob A. Papay, Jr. is a partner with Gebhardt & Kiefer, PC, and practices primarily in the areas of construction defect claims, construction injury claims, first-party insurer claims, insurance coverage disputes, subrogation, provider health care law, commercial law, defense of professional negligence, and public entity general liability.  He represents numerous insurers, Third Party Administrators, medical groups, and businesses, and he has successfully defended public entity officials and employers in wrongful death, discrimination, excessive force and other civil rights claims.  In addition, Mr. Papay represents small businesses in mergers, acquisitions, trade secrets, employment and unfair trade practice claims. 

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Any statements made herein are solely for informational purposes only and should not be relied upon or construed as legal advice.