A serious car accident can leave you with medical bills, lost income, and other losses that exceed the at-fault driver’s insurance limits. In New Jersey, underinsured motorist (UIM) coverage may provide additional compensation when the driver who caused the crash has insurance, but not enough to cover your damages.
UIM coverage is part of your own auto insurance policy. It applies when the at-fault driver’s liability limits are lower than your UIM limits. Under New Jersey law, a vehicle is generally considered underinsured only when the available liability limits are less than the UIM limits under the injured person’s policy.
For example, if the at-fault driver has $50,000 in bodily injury coverage and you have $100,000 in UIM coverage, you may be able to seek additional benefits after the other driver’s coverage is exhausted. Because amounts recovered from the liability policy reduce the UIM benefits available, the additional recovery would generally be limited to $50,000, depending on your damages and policy terms.
If the other driver has $100,000 in liability coverage and you also have $100,000 in UIM coverage, the vehicle generally will not qualify as underinsured—even if your losses exceed $100,000.
A UIM claim is made against your own insurance company, but payment is not automatic. You still need to prove the other driver was responsible for the accident and establish your damages. These may include medical expenses, lost wages, reduced earning capacity, pain and suffering, and other losses allowed by law.
New Jersey law generally requires the at-fault driver’s applicable liability coverage to be exhausted before UIM benefits become available. You should also be careful about settling too quickly. Under New Jersey’s Longworth procedure, the UIM insurer generally must receive notice before a settlement is finalized so it can protect its potential subrogation rights. Signing a release too early can jeopardize a UIM claim.
Disputes may involve fault, the value of injuries, insurance limits, notice requirements, or whether the policy provides UIM coverage. Policy type matters too. New Jersey’s Basic Policy does not include UM/UIM coverage, while the Standard Policy provides UM/UIM protection subject to the coverage selected.
Keep the other driver’s insurance information, accident report, medical records, bills, and proof of lost income. Notify your insurer promptly and review your declarations page for your UIM limits. Do not accept a policy-limits settlement or sign a release until you know whether a UIM claim may be available.
When another driver’s insurance is not enough, UIM coverage can be an important source of recovery. A New Jersey auto accident attorney can review the policies, protect important deadlines, and help pursue available compensation.
