What Is the Verbal Threshold in Auto Insurance?

Related Attorney: Timothy E. Dinan

July 19, 2023What Is the Verbal Threshold in Auto Insurance?

In the context of auto insurance, the verbal threshold, or limitation on lawsuit option, refers to a type of limitation on the right to sue for non-economic damages, such as pain and suffering, resulting from a car accident. It is an option available in certain states, including New Jersey.

Under the verbal threshold, policyholders who select this option agree to limit their ability to sue for non-economic damages unless their injuries meet specific criteria defined by the insurance policy or state law. This option is often associated with lower insurance premiums.

In New Jersey, the verbal threshold is a choice that drivers can make when purchasing auto insurance. By selecting the verbal threshold option, policyholders agree that they can only sue for non-economic damages if they sustain injuries that fall into certain predefined categories, such as:

  • Death
  • Dismemberment
  • Significant disfigurement or scarring
  • Displaced fractures
  • Loss of fetus
  • Permanent injury

To meet the threshold for a permanent injury, the injury must have a significant impact on the person's life, such as causing a loss of bodily function, impairment, or a substantial limitation of a bodily organ or system. This must be proven using objective, credible, medical evidence, which means a doctor needs to point to some type of diagnostic test to prove the permanent injury.

If the injuries do not meet the verbal threshold criteria, the policyholder is generally limited to seeking compensation only for economic damages, such as lost wages. However, it is important to note that this limitation on lawsuits typically does not apply to cases involving commercial vehicles like trucks, busses, or work vehicles.

It is crucial to carefully consider the implications of selecting the verbal threshold option when purchasing auto insurance. It is recommended to review the policy terms, consult with an insurance agent, and evaluate personal circumstances to determine the most appropriate coverage option for your needs.