Uninsured and Underinsured Motorists Coverage
Many cars are not covered by insurance. This is despite New Jersey law, which requires auto insurance. Some motorists break the law. Some are residents of other states that do not require auto insurance by law.
Uninsured Motorists benefits provides coverage to you, your passengers or relatives living with you, if a motorist without insurance is legally liable for injuries to these persons or for damage to your car or its contents. This coverage also provides benefits if you are the victim of a hit-and-run accident.
Underinsured Motorists coverage to protect you from those
motorists who are underinsured. If you are in an accident caused by such a motorist, Underinsured Motorist coverage will pay damages up to the difference between your Underinsured Motorists coverage limit and the other driver’s liability coverage limit.
You must purchase coverage in minimum limits of at least $15,000 per person, $30,000 per accident and $5,000 for property damage. On a Combined Single Limit basis the minimum limit is $35,000 for each accident.
The Uninsured Motorists Property Damage coverage has a $500 deductible, which means you pay the first $500 of a claim under that coverage.
You can buy higher Uninsured/Underinsured Motorists Coverage limits, but only as high as the liability coverages you have purchased. Your right to sue in an uninsured or underinsured motorists claim is governed by your choice of the Limitation on Lawsuit Option (Verbal Threshold) or No Limitation on Lawsuit Option (Zero Threshold). In other words, you have the same threshold option under uninsured/underinsured motorists coverage that you chose for bodily injury liability coverage.
Let’s look at some claims examples to see how this coverage works.
Suppose that car that ran the red light was not insured. You would collect your first party medical expense benefits under your PIP coverage. You would collect for essential services, the cost of hiring someone to mow your lawn, clean your house, etc, under your PIP coverage. You would also collect for the unpaid medical expenses (PIP deductible and co-payment) under your uninsured motorists coverage.
Your right to sue for pain and suffering is still governed by your choice of the limitation on lawsuit threshold or the no limitation on lawsuit threshold. In this case, since the other party is uninsured, you would bring suit against your own insurer for these damages.
Now let’s suppose that the other car that ran the red light was insured, but carried only the minimum split limits required by law, $15,000 per person, $30,000 per accident, and $5,000 property damage. Further, suppose you carry uninsured/underinsured motorists limits of $100,000 per person, $300,000 per accident and $50,000 property damage. You collect under your personal injury protection coverage for first party medical expenses and essential services. There remains the $1,200 out-of-pocket expenses for your PIP deductible and co-pay. The other driver’s insurer pays the $1,200 under his bodily injury liability coverage. But a court rules that you are entitled to collect another $38,800 in damages for pain and suffering. Since the other driver’s bodily injury liability per person limit is only $15,000 and out of this figure $1,200 has already been paid, you are entitled to collect the unpaid difference from your own carrier under your underinsured motorists coverage. You collect $13,800 from the other drivers liability coverage (the unused portion of his per person bodily injury liability limit) and $25,000 from your own carrier, representing the remainder of the amount due for pain and suffering.
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Uninsured and Underinsured Motorist (UM/UIM) coverage is packaged together in New Jersey. That means you can’t buy one of the coverages without the other, and there is one premium charge for both coverages combined. As with Bodily Injury Liability and Property Damage Liability insurance, higher limits of UM/UIM coverage are available at a relatively lower cost.
