New Jersey Appellate Court Prohibits Unlicensed Drivers From Collecting PIP Benefits

The New Jersey Appellate Division has ruled that an unlicensed driver may not recover PIP benefits for their own medical expenses sustained in an auto accident, even if they had permission from the vehicle’s owner to drive the vehicle.

In Blanco-Sanchez v. Personal Service Insurance Company, A-5393-16 (Feb. 28, 2019), plaintiff, who was the daughter of the named insured, was injured in an accident that occurred while the plaintiff was moving her mother’s car to avoid getting a parking ticket. Her mother had asked the plaintiff to have the car moved, but did not expect the plaintiff to drive the car herself as she knew the plaintiff did not have a driver’s license and had never driven that car. The insurer of the vehicle denied the plaintiff’s claim for PIP benefits on the basis that the policy excluded from PIP coverage anyone who operated the vehicle “without the permission of the owner or other named insured.”

Affirming the dismissal of the plaintiff’s subsequent lawsuit against the insurer, the appellate division held that unlicensed drivers are barred from recovery under New Jersey’s PIP statute because “as a matter of public policy, an owner cannot give permission to a driver who is known to be unlicensed[.]” The court acknowledged that neither the statute nor the policy expressly exclude coverage for permissive drivers who are unlicensed. However, the court emphasized that New Jersey law also requires all drivers to be licensed and allows insurers to decline to issue a policy to a driver whose license has been suspended or revoked. The court explained that to require the insurer to provide PIP benefits to a driver who by definition was ineligible for coverage would contravene this public policy.

Blanco-Sanchez is a reminder that a driver who otherwise would qualify as a permissive user may still not be entitled to PIP benefits if they did not have a valid driver’s license at the time of the accident. To ensure that only those persons who are eligible for coverage receive PIP benefits, any investigation by an insurer of a claimant’s permissive-user status should include verification of whether that person had a valid driver’s license at the time of the accident.

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