Deductible

What is a deductible?

A deductible is the portion of a covered loss you bear before the insurer's obligation begins. It is selected when the policy is purchased and appears on the declarations page.

Higher deductibles lower the premium, which is the tradeoff every policyholder makes whether or not they think about it consciously.

In New Jersey auto insurance the concept applies to PIP medical coverage as well as to physical damage coverage on the vehicle.

That is unusual and catches people by surprise, since most assume no fault medical coverage pays from the first dollar.

It is a familiar concept in health and property insurance and an unfamiliar one applied to no fault medical coverage.

How does the PIP deductible work?

Two mechanisms reduce what PIP actually pays.

• A deductible applies before benefits begin
• A copay percentage then applies to a further band of expenses
• Higher deductible selections reduce the premium substantially
• The choice is made at purchase and appears on the declarations page
• Amounts you bear may form part of the claim against the at fault party

Why does this matter after a crash?

Because people expect no fault coverage to pay their medical bills and instead receive bills for the portion PIP did not cover.

The gap is largest early, when the deductible applies and treatment is most intensive, which is exactly when an injured person can least absorb it.

This is one reason a letter of protection is sometimes arranged, allowing treatment to continue without upfront payment.

Providers may bill the patient directly for these amounts, which arrives as an unwelcome surprise during recovery.

Are these amounts recoverable?

Amounts you paid out of pocket for injury related treatment generally form part of your economic damages against the at fault party.

Keeping records of what you actually paid matters, since these amounts are easily overlooked when the focus is on the larger billed figures.

Physical damage deductibles on your own vehicle may also be recoverable through your insurer's subrogation against the at fault driver.

Keeping receipts and explanation of benefits statements from the outset makes this straightforward later.

Common questions

Why am I getting medical bills if I have PIP?

PIP applies a deductible and a copay percentage, so a portion falls to you. Balances beyond PIP limits also fall elsewhere.

Can I recover what I paid out of pocket?

Amounts you bore for injury related treatment generally form part of your economic damages claim. Keep the records.

Will I get my collision deductible back?

Where your insurer recovers from the at fault driver through subrogation, the deductible is frequently returned in whole or in part.