I. Introduction: The Realities of Uninsured and Underinsured Drivers
Even though New Jersey law mandates that every driver must carry auto insurance, a surprising number of motorists remain uninsured or carry only minimal coverage. Current estimates suggest that about 3–4% of drivers in New Jersey are uninsured, which is lower than the national average of 12–14% but still significant enough to create real financial risks if you are involved in an accident with one of them.
In many cases, drivers may have insurance, but the policy limits are so low that they cannot cover the full extent of damages caused in a serious accident. That is where UM (Uninsured Motorist) and UIM (Underinsured Motorist) coverage step in to safeguard you and your family.
II. Defining UM and UIM Coverage
- Uninsured Motorist (UM) Coverage: Protects you if you are involved in an accident where the at-fault driver has absolutely no insurance. Your own insurance company compensates you for medical bills, vehicle damage, and other losses, up to your UM policy limits.
- Underinsured Motorist (UIM) Coverage: Kicks in when the at-fault driver does have insurance, but their policy limit is insufficient to cover your total damages. If your total damages exceed the other driver’s liability limit, you can claim the difference through your UIM coverage, again subject to your own policy’s limits.
For example, if you sustain $100,000 in injuries and losses, but the at-fault driver only has $50,000 in liability coverage, you may claim the remaining $50,000 from your UIM policy, assuming your UIM limit is at least $100,000.
III. A Brief Look at New Jersey’s Minimum Insurance Requirements
New Jersey drivers must carry, at a minimum:
- Bodily Injury Liability: $15,000 per person and $30,000 per accident.
- Property Damage Liability: $5,000 per accident.
- Personal Injury Protection (PIP): At least $15,000 for medical expenses related to injuries from a car accident.
These minimum limits, however, can be quickly overwhelmed in serious collisions involving multiple injuries or major vehicular damage. In circumstances where the at-fault driver only has the state minimum—or no insurance at all—UM/UIM coverage within your own policy could be your only source of adequate compensation.
IV. Why Do Uninsured and Underinsured Situations Arise So Often?
- Financial Constraints: Many drivers aim to keep their premiums as low as possible, opting for the cheapest policy—often the legal minimum.
- Lack of Awareness: Some drivers are unaware of the serious financial exposure they face by not having proper insurance. Others may allow policies to lapse due to personal financial hardship.
- Legal or Documentation Issues: Individuals with suspended licenses, undocumented status, or other legal complications may choose to drive without valid insurance at all.
Given these realities, UM/UIM coverage acts as your safety net against drivers who either have no insurance or do not have enough.
V. Understanding Step-Down Clauses
New Jersey auto insurance policies commonly contain what is known as a “step-down” clause. This provision effectively reduces the UM/UIM coverage available to family members who are not the named insured on the policy. For instance, you might carry $100,000 in UM/UIM coverage for yourself, but your spouse or children may be limited to a much lower amount if they are injured while driving or riding in your car.
- Certain court decisions have somewhat limited the enforceability of overly broad step-down clauses, but they remain a significant concern. If your policy includes this provision, family members may not be fully protected.
- Review your policy carefully to see if a step-down clause exists. If it does, you may wish to adjust or remove it to ensure comprehensive coverage for everyone in your household.
VI. The Complexity of Filing a UM/UIM Claim
Although these coverages are meant to protect you, filing a UM/UIM claim can be more involved than a straightforward claim against the at-fault driver’s insurance. Here’s why:
- Verification of the Other Party’s Insurance: You must establish that the at-fault driver truly lacks insurance (for a UM claim) or has insufficient policy limits (for a UIM claim). This involves obtaining proof of coverage levels, often through formal requests to the other driver’s insurer.
- Accurate Damage Assessment: You’ll need to compile evidence of medical expenses, rehabilitation costs, vehicle damage, lost wages, and potential future medical care.
- Negotiation with Your Own Insurer: Some people assume that their own insurance company will gladly pay UM/UIM claims. However, insurers often attempt to minimize payouts.
- Potential Arbitration or Litigation: If disputes arise over liability or the amount of damages, you may have to proceed to arbitration or even initiate a lawsuit.
Because UM/UIM claims can become contentious, many policyholders retain personal injury attorneys who have experience navigating these specialized insurance claims.
VII. Real-Life Examples of UM/UIM in Action
- Example A: Total Absence of Insurance
Jane was hit at an intersection by a driver who ran a red light. After the collision, it was discovered that the at-fault driver had no insurance whatsoever. Jane filed a UM claim with her own insurer, which paid her medical bills and some of her lost wages. - Example B: Minimum Liability Coverage
John’s car was sideswiped by a driver carrying only $15,000 in bodily injury liability coverage. John’s injuries, however, required hospitalization and therapy costing nearly $40,000. Because John had $50,000 in UIM coverage on his own policy, he was able to claim the additional $25,000 beyond the at-fault driver’s policy limit.
In both scenarios, UM/UIM coverage was critical to ensuring that the injured party did not bear the entire financial burden of the accident.
VIII. How Much UM/UIM Coverage Should You Carry?
While each driver’s needs vary, many insurance experts recommend carrying at least $100,000 in UM/UIM coverage per person. If you have multiple family members or foresee the possibility of extensive injuries, consider even higher limits. Your potential medical bills, long-term rehabilitation, and lost income can far exceed lower coverage limits.
Additionally, PIP coverage in New Jersey typically pays a certain amount of your medical expenses regardless of fault, but serious accidents can easily surpass those limited amounts. UM/UIM then becomes essential to bridging the gap.
IX. Key Considerations When Selecting or Reviewing Your UM/UIM Coverage
- Check for Step-Down Provisions: Ensure that everyone in your household enjoys the same level of UM/UIM benefits if that’s your goal.
- Evaluate Your Policy Limits: Saving money on premiums by choosing low limits may leave you and your family at risk of significant out-of-pocket expenses after a major accident.
- Examine the Arbitration Clause: Different insurance policies handle disputes in various ways. Some may require binding arbitration with little room for negotiation.
- Consider Supplementary Endorsements: Beyond UM/UIM, you might also explore endorsements that cover towing, rental cars, or extended property damage coverage.
X. Why You May Need an Attorney
Although some individuals try to handle UM/UIM claims on their own, an experienced personal injury lawyer can offer valuable assistance:
- Precise Valuation of Damages: An attorney can help ensure that all economic and non-economic damages are accounted for, including future medical costs and potential loss of earning capacity.
- Negotiation and Advocacy: Insurance carriers, including your own, are typically profit-driven entities that prefer to minimize payouts. A lawyer can advocate for the full and fair compensation you deserve.
- Handling Complex Procedural Steps: From filing formal notices to gathering expert testimonies, an attorney knows how to navigate the system efficiently, reducing the likelihood of procedural mistakes that could harm your claim.
XI. Concluding Thoughts: UM/UIM as Your Last Line of Defense
Accidents involving uninsured or underinsured drivers can happen at any time—and the consequences can be financially devastating if you don’t have adequate coverage. UM/UIM coverage serves as your personal shield against the unpredictability of the roads.
- Take a moment to review your auto policy and confirm that you have adequate UM/UIM limits in place.
- Make sure step-down clauses aren’t diminishing the protection for your family.
- If you have any questions or concerns, don’t hesitate to consult a knowledgeable legal professional.
Remember, it’s far better to be prepared with robust UM/UIM coverage than to discover your policy is lacking only after an accident occurs.
Need Assistance? Contact Song Law Firm
If you have been injured in a car accident in New Jersey or New York, securing the maximum compensation requires swift legal action. At Song Law Firm, we have successfully represented countless accident victims, ensuring they receive full and fair compensation for their injuries.
Call us now at 201-461-0031 or email us at pi@songlawfirm.com to schedule a consultation.
Taking action quickly is the key to maximizing your settlement.
Disclaimer: This column is for general informational purposes and does not constitute legal advice for any individual case or situation. For advice tailored to your specific circumstances, please consult with a qualified attorney.
