Imagine driving through a green light when suddenly a car rushes past the red signal, colliding with yours. Later, you discover the other driver has no insurance. This is where UM/UIM coverage becomes invaluable.
Introduction
Navigating the complexities of auto insurance can be a daunting task, especially when it comes to understanding Uninsured/Underinsured Motorist Coverage (UM/UIM). In the state of New Jersey, UM/UIM coverage is an essential part of auto insurance that can protect you when the unexpected happens. This legal column aims to shed light on how UM/UIM coverage works under New Jersey law and why it is crucial for every motorist.
What is UM/UIM Coverage?
UM/UIM coverage is a component of your auto insurance policy that provides financial protection in the event you are involved in an accident with a driver who is either uninsured or underinsured. An “uninsured motorist” is someone who does not have any auto insurance, while an “underinsured motorist” is someone whose insurance coverage is insufficient to cover the damages incurred in an accident.
Legal Requirements in New Jersey
In New Jersey, UM/UIM coverage is not mandatory but is highly recommended. The state requires a minimum liability insurance coverage, which includes $15,000 for injury or death to one person, $30,000 for injury or death to more than one person, and $5,000 for property damage. However, these minimums are often insufficient in the event of a severe accident, making UM/UIM coverage a wise addition to your policy.
How Does UM/UIM Coverage Work?
If you are involved in an accident with an uninsured or underinsured motorist, you can file a claim with your own insurance company under your UM/UIM policy. Your insurer will then step in to cover the costs that the at-fault driver’s insurance cannot. In New Jersey, the UM/UIM coverage typically mirrors your liability coverage limits unless you choose otherwise.
Example:
Let’s say you have a UM/UIM policy with coverage limits of $100,000 per person for bodily injury and $50,000 for property damage. You are involved in an accident where the other driver is at fault but only has a liability limit of $50,000 per person for bodily injury and $25,000 for property damage.
- Bodily Injury:
Your medical bills amount to $40,000. Since New Jersey is a “no-fault” state, your own PIP coverage would handle your medical expenses. However, you also suffer from pain and suffering, loss of enjoyment of life, and other non-economic damages that amount to $70,000.
In this scenario, the at-fault driver’s insurance would pay the maximum limit of $50,000 for your non-economic damages. Your UM/UIM coverage would then cover the remaining $20,000 ($70,000 total non-economic damages – $50,000 paid by the at-fault driver’s insurance).
- Property Damage:
The damage to your vehicle amounts to $40,000. The at-fault driver’s insurance would pay their maximum limit of $25,000. Your UM/UIM coverage would cover the remaining $15,000 ($40,000 total property damage – $25,000 paid by the at-fault driver’s insurance).
This way, you are not left with a financial burden due to someone else’s lack of adequate insurance coverage.
The “Step-Down” Provision
New Jersey law allows for what is known as a “step-down” provision in UM/UIM policies. This provision can reduce the amount of coverage available to family members other than the named insured on the policy. It’s crucial to read your policy carefully and consult with a legal advisor to understand how this provision may affect you.
Filing a UM/UIM Claim
Filing a UM/UIM claim in New Jersey involves several steps:
- Notification: Notify your insurance company as soon as possible after the accident.
- Investigation: Your insurer will investigate the claim, which may include reviewing police reports, medical records, and other evidence.
- Negotiation: Your insurer will negotiate with the at-fault driver’s insurance company, if applicable.
- Arbitration: If a settlement cannot be reached, the case may go to arbitration, as most UM/UIM policies in New Jersey require arbitration to resolve disputes.
Legal Challenges
UM/UIM claims can be complex and may require the expertise of a legal professional. Issues such as determining fault, assessing the extent of injuries, and negotiating with insurance companies can complicate the process. Therefore, it’s advisable to consult with an attorney experienced in personal injury and UM/UIM cases.
Conclusion
UM/UIM coverage is an invaluable part of auto insurance that can offer financial protection against the unforeseen. While not mandatory under New Jersey law, it is highly recommended for comprehensive protection. Understanding the intricacies of UM/UIM coverage and the legal landscape in New Jersey can help you make informed decisions and safeguard your interests in the event of an accident.
Disclaimer: This column is intended for informational purposes only and should not be construed as legal advice. Consult with a qualified attorney for advice regarding your specific situation.