Statutory Minimum Income Continuation, Essential Services, and a Death Claim That Demands $250,000
Devon is a self-employed hardwood-floor installer insured on a New Jersey policy with statutory minimum PIP: $250,000 medical expense, income continuation at 80% of lost income subject to $5,200 per month and a $15,600 aggregate maximum, essential services at $12 per day up to $4,380, and $5,200 in death benefits.
On June 2 a van strikes him while he is loading his truck. He sustains a tibial plateau fracture and a rotator cuff tear and cannot work for five months. His most recent return shows $92,400 in net self-employment profit, and his average monthly billings run about $7,700. He paid the premiums himself on a private short-term disability policy that pays $3,000 a month, and in month three his brother handed him $4,000 in cash, calling it a loan.
Before the crash Devon did all the housecleaning and yard work. His wife now pays a neighbor $550 a month to clean and $120 a month for lawn care. Devon's 19-year-old nephew, a passenger, dies of his injuries nine days after the crash; the estate's lawyer demands the full $250,000, arguing that death is the ultimate medical expense.
1. Calculate Devon's income continuation entitlement for the five months and identify which payments offset it.
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Step 1 - Establish the loss-of-income base. For a self-employed claimant the measure is documented net income, not gross billings. $92,400 / 12 = $7,700 per month, which conveniently matches his billings here, but the principle matters: if net profit were $5,000 a month, the claim would be built on $5,000.
Step 2 - Apply the 80% factor. 80% x $7,700 = $6,160 per month.
Step 3 - Apply the monthly cap. $6,160 exceeds the $5,200 monthly maximum, so the monthly benefit is $5,200.
Step 4 - Apply the aggregate cap. The aggregate maximum is $15,600. $15,600 / $5,200 = exactly three months. He is paid months 1 through 3 and receives nothing in months 4 and 5, because he bought the statutory minimum rather than an increased income continuation limit.
Step 5 - Offsets.
- Private short-term disability policy he funded himself: a collateral source, not an offset. He keeps both.
- Brother's $4,000: a loan or gift, not wage continuation, so no offset - unless the facts show it was really payment for work he performed during the layoff, in which case it reduces lost income.
- Workers' compensation or an employer wage-continuation program: would offset. Neither exists here.
Result: $15,600 total, exhausted after three months, with months four and five uncovered. Advise him now, because claimants routinely assume the benefit runs as long as the disability does.
2. How much can Devon recover for essential services, and what must be proven?
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Threshold question - did he ordinarily perform these services? Essential services benefits replace services the injured person personally performed for the household before the injury. Devon did all the cleaning and yard work himself, so the need is genuine rather than a new expense created for the claim. If the family had always employed a cleaning service, there would be nothing to replace.
Measure of the benefit. The benefit is the reasonable cost of substitute services, capped at $12 per day and $4,380 in the aggregate per person per accident.
Apply the daily cap first. $550 + $120 = $670 per month, roughly $22 per day of need. That exceeds the $12 daily cap, so the carrier pays $12 per day, not $670 per month.
Apply the aggregate cap second. Five months is about 152 days. 152 x $12 = $1,824, comfortably under the $4,380 aggregate maximum. So the aggregate cap never binds; the daily cap does.
Result: approximately $1,824, not $3,350.
Documentation and traps.
- Keep the neighbor's invoices and proof of payment.
- Do not pay twice: he cannot collect the full $670 per month and the $12 daily benefit on top of it.
- Benefits stop once he can resume a given task (for example, light yard work before he can return to installation work).
- Services performed by a family member at no charge are generally not reimbursable as incurred expense, though the regulations should be checked on this point.
3. Evaluate the estate's demand for the full $250,000 death benefit.
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The demand conflates two separate benefits.
Death benefit. PIP provides a death benefit of $5,200 at the statutory minimum, payable to the decedent's estate or designated beneficiary. It can be increased by endorsement, but this policy did not do so. The estate receives $5,200, not $250,000.
Medical expense benefits. The $250,000 limit covers the nephew's treatment from the crash until his death - nine days of hospital care, surgery if performed, and related services. Those bills are paid to the providers, or to the estate as assignee, up to the limit. The two benefits are cumulative, not alternative: the estate can recover both the treatment costs and the $5,200 death benefit.
What the estate cannot do. It cannot recharacterize the death itself as a medical expense to reach the $250,000 medical limit. Death is the trigger for the death benefit, not a medical charge.
Other routes the estate should be told about. A wrongful death and survivorship action against the at-fault driver is a separate tort claim, subject to the tort option elected on the decedent's own policy if he had one, or on the policy under which he was an insured. If he was covered by the limitation-on-lawsuit option, death is one of the enumerated threshold categories that permits a non-economic damages claim, so the threshold does not bar the wrongful death claim.
Practical handling. Pay the $5,200 promptly against a certificate of death and estate documentation; pay the medical bills as they are verified; and send a written explanation of the calculation so the estate's lawyer does not litigate a misunderstanding.