In Perez v. Farmers Mutual Fire Ins. Co., 417 N.J. Super. 403 (App. Div. 2011), The New Jersey Appellate Division provided further clarity as to which vehicles are required to carry PIP in New Jersey. The decision will also have significant implications regarding PIP recovery in New Jersey. The full text of the decision can be read here (case will open in a new windows or tab).
Plaintiff Jose Perez was injured in an accident while he was driving his church's van, a van with five rows of seating and a capacity of 15. The van was covered under a commercial policy by Farmers. Perez also had personal automobile insurance on his own car, issued by Encompass. The Farmer's policy was a commercial policy, and did not include a PIP endorsement. The Encompass policy included a PIP endorsement which applied only to "bodily injury . . . caused by an accident arising out of the ownership, maintenance or use . . . of an auto as an automobile." Perez claimed PIP benefits from both insurers. Farmers denied because its policy did not include a PIP endorsement. Encompass denied because it claimed that Perez's injuries did not arise from use of an "automobile."
Essentially, the case came down to the question of whether the five-row, fifteen-seat van qualified as an "automobile" as defined in N.J.S.A. 39:6A-2(a). If it did, then the van would require PIP, pursuant to N.J.S.A. 39:6A-4, and the Farmers policy would have been deemed to include that coverage. Additionally, if the van were an "automobile," then Encompass would have to provide coverage. The court found that the van was not an "automobile" and therefore neither Farmers nor Encompass needed to provide PIP benefits.
TWO PRONGED TEST FOR "AUTOMOBILE"S REQUIRING PIP COVERAGE
N.J.S.A. 39:6A-4 requires "automobiles" to carry PIP coverage. The Appellate Division noted that the definition of "automobile," found in N.J.S.A. 39:6A-2(a) identifies two types of vehicles and then gives certain requirements for those vehicles to qualify as "automobile"s:
Slightly complicating this two-pronged approach is Giordano v. Allstate Insurance Company, 260 N.J. Super. 329 (App. Div. 1992), which held that a minivan is a "private passenger automobile of a private passenger or station wagon type" rather than a "motor vehicle with a pickup body, a delivery sedan, a van, or a panel truck . . .". Giordano. said that "[a] van is usually understood to be an enclosed vehicle used for the transportation of goods or animals," citing Webster's Ninth New Collegiate Dictionary 1303 (Merriam-Webster, 1986), leaving the possible impression that any passenger van would be considered a "private passenger" vehicle, and hence require PIP, as long as it is not "used as a public or livery conveyance for passengers nor rented to others with a driver". The Appellate Division in Perez noted that other definitions of "van" include vehicles used to transport people. Instead, the Appellate Division found that the key distinction between the first and second prongs of the "automobile" test was whether a vehicle was "customarily used as private passenger automobiles by individuals and families." If that is the case, the statute defines the vehicle as an "automobile" (and hence requires PIP) as long as it is not "used as a public or livery conveyance for passengers nor rented to others with a driver." On the other hand, the court wrote that the definition "recognizes that certain other types of motor vehicles, such as pickup trucks, delivery sedans, vans, and campers, are also sometimes used as private passenger vehicles," and hence allowed those types of vehicles to be "automobiles" requiring PIP, but only if they are privately owned and not used in business (other than farming or ranching).
Applying these rules to the church van, the Appellate division wrote that:
The church van involved in this case is a completely different type of motor vehicle than the minivan the court in Giordano concluded was a "station wagon type" vehicle. As described by plaintiffs, the church van "had five rows of seats" and was designed to carry up to fifteen passengers. Although there may be some large families that use such vehicles for private passenger purposes, this is not their customary use. This type of van is more commonly used by hotels, automobile rental companies, and other business operations to transport customers, similar to the use that would be made of a small bus. Thus, unlike a minivan or SUV, which today serve the same function a station wagon served when the No Fault Law, including N.J.S.A. 39:6A-2(a), was enacted in 1972, L. 1972, c. 70, the type of van owned by the church is not used primarily as a private passenger vehicle. Therefore, it is not a "private passenger automobile of a private passenger or station wagon type" within the intent of the first part of the definition of "automobile" in N.J.S.A. 39:6A-2(a). Instead, this vehicle is a "van" that falls under the second part of the definition of "automobile."
Since the church van was owned by a church, and not by an individual or by a husband and wife, it clearly did not meet the requirements for an "automobile" under the second prong of the test. Therefore, the church van did not meet the definition of "automobile," and thus it did not require PIP coverage, and the Encompass policy did not apply, since the loss did not arise from the use of an automobile.
The lesson is that any type of vehicle that would typically be used as a family car will fit the first prong of the "automobile" test, and will require PIP, even if commercially owned, unless it is "used as a public or livery conveyance for passengers []or rented to others with a driver". Vehicles that are typically used for transport of goods or for transporting large numbers of people will fall under the second prong of the "automobile" test and therefore will only be required to carry PIP if they are privately owned and not used in business (other than farming or ranching).
It is also worth noting that there is a separate form of PIP required of certain buses (presumably including vans operating as buses). This coverage, known as "Medical Expense Benefits" coverage (MEB) or bus-PIP is required of buses that run routes for a fee or are charter buses and for most legal purposes are treated just the same as regular PIP coverage. Click here for information about bus-PIP
IMPORTANT IMPLICATIONS FOR PIP RECOVERY
Under NJSA 39:6A-9.1 an insurer paying PIP can recover PIP from a "tortfeasor who was not, at the time of the accident, required to maintain personal injury protection . . . or although required did not maintain personal injury protection . . ." Based on Perez we now have a clearer picture of which vehicles do not require PIP, and hence, will be subject to PIP recovery when they cause an accident. Note that there is some debate as to whether a vehicle voluntarily carrying PIP although not required to do so under New Jersey law is subject to PIP recovery. Click here for a discussion of that issue.
Please visit our Guide to Recovery of PIP in New Jersey for the text of the key New Jersey statutes regarding PIP recovery, together with an outline of those statutes, hyperlinks to definitions of key terms, discussions of key provisions of each statute, relevant case law, and other selected issues of New Jersey subrogation.
Please note that the information included herein is solely the product of Law Offices of Jan Meyer and Associates, P.C and does not not constitute legal advice. For legal advice kindly contact our office.