N.J. Court Decision Offers Incentive for Uninsured Motorists to Obtain Necessary Coverage

February 20, 2004

The New Jersey Supreme Court on Thursday unanimously reversed an appellate court decision by upholding a state law that bars the right of an uninsured motorist to sue for noneconomic damages resulting from an injury from an automobile accident.

“Today’s decision is good public policy because it gives a powerful incentive for drivers to acquire the protection that is necessary for themselves and others when operating a vehicle in New Jersey,” Richard Stokes, regional manager and counsel of the Property Casualty Insurers Association of America (PCI), said. “If an individual does not contribute to and participate in the insurance system, the individual should not be able to benefit from that system and draw on its funds.

“The law is fair because it allows an injured person to receive economic damages — for car repairs and hospital bills — even if that person is uninsured. But these uninsured drivers don’t deserve anything extra.”

In the decision regarding Caviglia v. Royal Tours of America, the Supreme Court wrote that it upholds the state law “on due process grounds because the statute does not implicate a fundamental right and it is rationally related to, and suitably furthers, a legitimate state interest. We also find that the (state law) does not violate the equal protection rights of uninsured drivers under the Federal or State Constitutions” because uninsured drivers are not similarly situated to insured drivers since uninsured drivers are in violation of the law, and their counterparts are not.

Caviglia v. Royal Tours of America stemmed from an automobile accident on Oct. 13, 1997 between an uninsured driver, who reportedly suffered serious injuries, and the operator of a tour bus owned by Royal Tours of America.

Attorneys for Royal Tours of America reportedly argued that because the plaintiff was uninsured, the plaintiff was barred from suing for economic and noneconomic — pain and suffering — losses. The trial court concluded that the law violated the equal protection and due process guarantees of the Federal and State Constitutions. The Appellate Division in Caviglia affirmed the trial court’s decision, calling the state law “arbitrary and irrational.”

“The message from this court decision is simple: either motorists obtain automotive liability insurance coverage or they lose the right to sue for noneconomic damages,” Stokes said. “As a result of this case, it is our hope that more individuals will comply with the state’s insurance laws and obtain liability insurance so that a greater pool of insurance proceeds will be available to all accident victims. This will also help stabilize insurance costs.

“Also, reducing the uninsured motorist population is a major goal of automobile reform legislation enacted last year, which PCI supports.”

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