On appeal from the Superior Court, Appellate Division, whose opinion is reported at 213 N.J. Super. 414 (1986).
For reversal and remandment -- Chief Justice Wilentz and Justices Clifford, Handler, Pollock, O'Hern, Garibaldi and Stein. Opposed -- None. The opinion of the Court was delivered by O'Hern, J.
[109 NJ Page 260] This is a PIP case. PIP is an acronym for personal injury protection benefits, a form of compulsory auto insurance required by the New Jersey Automobile Reparation Reform Act, L. 1972, c. 70 ("No-Fault" Law), N.J.S.A. 39:6A-4. This case
concerns the scope of the coverage afforded under a standard New Jersey automobile policy. We do not intend this opinion, or Wilson v. Unsatisfied Claim & Judgment Fund Bd., 109 N.J. 271 (1988), also decided today, to be a treatise on PIP law. We must of necessity refer to various issues that are peripheral to the central issues that we shall decide. We refer to such secondary issues only as background to the matters before us and we shall use terms of convenience, not of art, such as "family" in lieu of "household," to simplify statutory references.
At the outset, we note also that our "No-Fault" Law is premised on certain underlying assumptions: namely, that most automobile accidents involve private passenger cars, and that most households will own a car. Thus, compulsory automobile insurance providing basic PIP benefits for the occupants of each car and the members of each car owner's family is designed to provide quick and easy reimbursement for the basic personal costs most people incur when they are involved in an automobile accident. Usually, the benefits payable under PIP law are the familiar common-law special damages for "bodily injury," such as medical expenses and lost income. PIP's strategic goal is to counter, by early payment of bills without regard to a driver's fault, the increasing spiral of automobile negligence cases that were thought to have been a major cause of rising auto insurance premiums in New Jersey, as well as much of the congestion in the court system.
Expressed symbolically, the basic scheme of PIP is that each car in personal use should take care of its passengers and that each family car should take care of that family. The relevant language of the statute creating those two tiers is as follows:
Every automobile liability insurance policy [providing liability insurance] * * * shall provide personal injury protection coverage (PIP) * * * for the payment of benefits without regard to negligence, liability or fault of any kind
(1) TO THE NAMED INSURED and MEMBERS OF HIS FAMILY residing in his household who sustained bodily injury as a result of an accident while
(a) occupying, entering into, alighting from or using an automobile,
(2) TO OTHER PERSONS sustaining bodily injury while
(a) occupying, entering into, alighting from or using the automobile of the named insured, with the permission of the named insured * * *. [N.J.S.A. 39:6A-4 (emphasis added).]*fn1
We can see how this system functions by examining a typical two-car accident involving two families out for a Sunday drive with two respective parents, A and B, driving their respective family cars. We realize that this discussion may appear overly simplistic to those familiar with PIP, but we believe that these examples may be helpful to the reader. Assume that each car carries a parent, child, and two unrelated passengers, and that following the accident, all eight occupants are taken to the hospital, where they all incur medical expenses. In the anticipated situation of two insured cars, each of the occupants of Car A would be covered for all necessary medical treatment by Car A's PIP insurance company. Similarly, Car B's occupants would be covered by Car B's PIP carrier.*fn2
But what if Car B were uninsured? Assume for example that, through a technicality, Car B's PIP coverage had lapsed, but that B had another car ...