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Please explain to me the pros and cons of zero threshold.

In an effort to reduce the cost of insurance for motor vehicles, some states have placed restrictions on people's ability to sue for non-economic losses. Those certain states have established a "threshold," or a level of pain and suffering, that must be met before a person can recover damages for non-economic loss.

The threshold level varies from state to state. Some states have made their threshold a mandatory requirement that everyone must meet to recover damages while other states have adopted a dual threshold requirement, allowing the consumer to choose between two or more options that control their individual right to recover damages.

New Jersey gives the consumer a choice regarding the right to sue for pain and suffering. When buying insurance, there are two choices the Zero threshold option (no limitation on lawsuit); or Lawsuit threshold (limitation on lawsuit).

Under the No Limitation on Lawsuit Option (zero threshold), you retain the right to sue the person who caused an auto accident for pain and suffering for any injury.

Selecting the zero threshold option in auto insurance allows an injured person to recover damages no matter what type of injury was suffered, as long as it is possible to successfully prove the case in court.

The pros of choosing the zero threshold option is that it allows you to maintain the right to sue for pain and suffering for any type of injury and recover damages no matter the type of injury sustained. The cons include paying an increased amount for your automobile insurance coverage keeping the ability to sue for pain and suffering.

It is a personal decision of deciding which is more important - your right to sue for pain and suffering or paying less money for your auto insurance coverage and having fewer rights to pursue monies for non-economic damages, pain and suffering, if you have received bodily injuries in an accident.

The lawsuit threshold, (commonly also called the verbal threshold or limitation on lawsuit option) limits the right to recover damages for pain and suffering to very specific types of injuries which state legislature has decided are permanent or serious injuries.

Under the Limited Right to Sue - by choosing the Limitation on Lawsuit Option, you agree not to sue the person who caused an auto accident for your pain and suffering unless you sustain one of the permanent injuries listed below: (Choosing this option does not affect your ability to sue for economic damages such as medical expenses and lost wages.)

  • loss of body part
  • significant disfigurement or significant scarring
  • a displaced fracture
  • loss of a fetus
  • permanent injury (Any injury shall be considered permanent when the body part or organ, or both, has not healed to function normally and will not heal to function normally with further medical treatment based on objective medical proof.)
  • death

This information is specific to New Jersey since it is the state normally thought of when one mentions zero threshold. If you want to know more about your state's threshold levels and the pros and cons if there is a choice to be made about coverages to purchase speak with your agent or contact your state's insurance regulatory body. Many state insurance departments have consumer guides for auto insurance for car owners to read through.


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