Second: UM/UIM Coverage

While the insurance statutes require all automobile liability policies to include uninsured motorist coverage minimum limits of $15/30,000, the insurers are required to offer the named insured uninsured and underinsured motorist coverage as an option with higher limits of $250/500,000 split limits or $500,000 single limit. There is no requirement that the liability and the UM/UIM limits be the same. The only requirement is that the UM/UIM limits "shall not exceed the insured's motor vehicle liability policy limits." N.J.S.A. 17:28-1.1(b).

It is my opinion that UM/UIM coverage is as important as liability coverage. Liability coverage protects the assets of the insureds if they are sued for bodily injury. But UM/UIM coverage protects the right to compensation if the insured is injured by a person who is uninsured or underinsured. Liability coverage provides compensation for a third party who is injured due to the negligence of the policyholder. UM/UIM coverage provides compensation for a policyholder who is injured by a third party who is uninsured or underinsured.

What is most important? Protecting a third party or protecting yourself? Protecting your assets or protecting your right to recover compensatory damages?

It is my opinion that liability coverage and UM/UIM coverage are equally important. The cost of UM/UIM coverage is very small in comparison to liability coverage. Thus, the Legislature should amend the insurance statutes to require the carriers to issue automobile policies with the same limits for liability and UM/UIM coverage.

Third: Intoxicated Plaintiffs

The New Jersey No Fault Act states that the owner or operator of an automobile (the defendant) shall be "exempted from tort liability for noneconomic loss" to a person who is subject to the verbal threshold and who is entitled to receive PIP benefits (the plaintiff) unless the plaintiff has sustained a bodily injury that satisfies one of the six types set forth in the statute. N.J.S.A. 39:6A-8. Even if the plaintiffs do not meet the verbal threshold, they still may maintain an action for non-economic loss (uncompensated medical expenses).

The No Fault Act provides the named insured with the choice to elect the "limitation on lawsuit option" (which limits the right to sue under the verbal threshold) or the "no limitation on lawsuit option" (which does not limit the right to sue). However, as initially enacted, the Act imposed the verbal threshold on any person who pleads guilty or is convicted of operating a motor vehicle in violation of N.J.S.A. 39:4-50 (driving while intoxicated). In 1997, the Act was amended to mandate that any person who pleads guilty or is convicted of DWI in connection with an accident "shall have no cause of action for recovery of economic or non-economic loss sustained as a result of the accident." N.J.S.A. 39:6A-4.5.

I recognize the strong public policy to deter drunk driving; however, the abrogation of all legal rights to recovery economic or non-economic loss is too Draconian a punishment for the violation of a motor vehicle regulation. Draco was a Greek Magistrate from the 7th Century B.C. who believed that all crimes, whether serious or trivial, should be punished by death. It is said that the Draconian Code was written in blood, not ink. (The Draconian Code was repealed by Solon in 594 B.C.)

While the loss of legal rights is not the same as the loss of life, the Draconian Code is a metaphor for the "loss limitation" provisions of the No Fault Act. It is my opinion that the No Fault Act should be returned to its original form and amended to provide that a plaintiff who pleads guilty or is convicted of driving while intoxicated can bring a claim for economic and noneconomic loss but shall be subject to the verbal threshold.

Fourth Intoxicated Defendants

The "loss limitation" provisions of the No Fault Act deal with the claims of a plaintiff who is driving while intoxicated. What about an intoxicated defendant? Should a defendant who pleads guilty or is convicted of DWI have the right to raise the verbal threshold as a defense so as to be exempt from tort liability.

In Woodworth v. Joyce, 373 N.J. Super. 114 (App. Div. 2004), the defendant pleaded guilty to driving under the influence. The plaintiff argued that it is the public policy of the State to deter drunk drivers and, thus, the defendant should not be permitted to claim an exemption from tort liability under the verbal threshold.

The Appellate Division noted that the "loss limitation" provisions of the No Fault Act relate only to the right of the plaintiff (an intoxicated driver) to recover damages for his own injuries. There is nothing in the Act that precludes an intoxicated defendant "from benefiting from the verbal threshold provision of the injured plaintiff's insurance policy." The Court noted, however, that "no doubt the Legislature is empowered to preclude an intoxicated driver from benefits by the verbal threshold."

There is no reason why a drunk driver should be exempted from tort liability for noneconomic loss. A defendant who pleads guilty or is convicted of driving while intoxicated should not be able to benefit from the plaintiff's election of the verbal threshold.

Accordingly, it is my opinion that the Legislature should amend the No Fault Act to provide that any person who is convicted of or pleads guilty of driving while intoxicated shall not be permitted to raise the loss limitation option (the verbal threshold) as a defense.

Gerald H. Baker is New Jersey's foremost expert on automobile insurance. He is counsel to the firm of Javerbaum Wurgaft Hicks Kahn Wikstrom & Sinins.