January 1, 1900

by Cherylee O. Melcher

Acommon misconception is that a motor vehicle that is owned and registered to a business is not required to carry personal injury protection (PIP) coverage. However, who owns the motor vehicle or how it is registered is not necessarily determinative of whether the vehicle is required to maintain PIP benefits under New Jersey’s no-fault statute. Registration is a concept relating exclusively to the privilege to use an automobile on a public road; it is not a concept affecting the nature of the vehicle itself.

A fundamental principle of the no- fault statute is that it is only applicable to accidents involving “automobiles,” which generally refers to private passenger vehicles or station wagon type vehicles. Accordingly, it is the nature of the vehicle which determines whether PIP coverage is required. This issue often arises when an injury is sustained by a person occupying a motor vehicle (usually a minivan or an SUV), which is owned by a business and used for commercial purposes. In these situations, our courts have repeatedly held that a minivan and an SUV are designed to be private passenger automobiles and are required to carry PIP coverage, regardless of how the vehicle is classified for registration and insurance purposes (i.e. whether it is insured under a commercial versus a personal policy of insurance).

What is PIP?

Under the New Jersey PIP statute, every standard automobile liability insurance policy currently in effect must have personal injury protection benefits. These benefits are effective regardless of fault and apply when a person sustains an injury as a result of an accident involving an “automobile.” PIP benefits are available for injuries sustained in accidents where the injured party is: 1) occupying an automobile, 2) entering or exiting an automobile, or 3) “using” an automobile. PIP also applies to a pedestrian injured by an automobile or by an object propelled by or from an automobile. Generally, PIP benefits cover treatment that is medically necessary for injuries sustained as a result if the accident involving an “automobile.”

What is an “Automobile” for PIP Purposes?

Pursuant to New Jersey law, there are two main categories of “automobiles” for purposes of PIP. First, an “automobile” is a “private passenger” or “station wagon type” vehicle, although certain types of even these vehicles are excluded based upon their particular use – such as those used as a “public livery or conveyance for passengers” or “rented to others with a driver.” Second, an “automobile” refers to the broader category of “motor vehicles” (including those with a pickup body, a delivery sedan, a van, a panel truck or a camper) provided they are not used for business purposes. A vehicle’s registration classification does not determine whether a vehicle is required to have PIP benefits; rather, the rule is to look first at the type of vehicle and then exempt some vehicles based upon their use. Importantly, commercial use is not the determinative factor.

Is a Minivan and/or SUV “Automobiles”Required to Maintain PIP Coverage?

Some may argue that a minivan or an SUV fall within the second category of “automobiles” and should be classified as a “van.” If the minivan and SUV were considered a “van” and customarily used for business purposes, there would be no requirement for PIP coverage. This rationale, however, is misplaced because a “minivan” and an SUV do not have the same characteristics as a “van” to place it within the second category of “automobile” as defined by the PIP statute.

The term “private passenger automobile” is a term of art used to distinguish such vehicles from “public” passenger automobiles (e.g. taxicabs) and private “freight” automobiles (e.g. trucks). As noted, the definition of “automobile” specifically includes a “station wagon type” vehicle not used as a public or livery conveyance for passengers. Although a vehicle may be used to promote a business, this does not preclude the vehicle from being classified as an “automobile” required to maintain PIP coverage.

Although a minivan or an SUV may customarily be used for “business, occupational, or professional purposes,” it is not a “van.” A van is usually understood to be an enclosed vehicle used for the transportation of goods or animals. In contrast, however, a minivan and an SUV are designed, equipped, and intended to be used precisely as a passenger automobile or station wagon. If the term “minivan” were not used in marketing, there would not be any basis to call it a van.

Analogous to the definition of a station wagon, a minivan is designed for passenger transportation as its interior is longer than a regular sedan; it usually has passenger capacity of six or more; it has rear seats that are readily folded or removed for light trucking; and there is no separate luggage compartment. Similarly, an SUV fits the definition of a “station wagon type” vehicle as it has similar design features. If sports utility vehicles did not qualify as automobiles, a large percentage of drivers on the road would be disqualified from PIP coverage, since there is an enormous usage of SUVs throughout the State.

Conclusion

 There is no legislative intent for the no-fault laws to exclude private passenger vehicles simply because they are commercially owned and used in business pursuits. The motor vehicle’s general status, as opposed to its general use, controls its classification. Accordingly, a minivan and an SUV fall within the first category of an “automobile” that mandates PIP coverage be maintained on these vehicles, regardless of whether the motor vehicle is used for commercial purposes.

 The attorneys of the Trial & Insurance Defense and Insurance Coverage Practice Groups of Hill Wallack LLP stand ready to assist any person, business or insurer facing issues related to PIP coverage.

Cherylee O. Melcher is an associate of Hill Wallack LLP where she is a member of the Litigation Division, Trial & Insurance Defense and Insurance Coverage Practice Groups.