Some of the most important motor vehicle insurance coverages a car owner in New Jersey can purchase is Uninsured/Underinsured Motorist benefits. This coverage is available to purchasers of basic insurance policies only. It is not available to the purchasers of a Special insurance policy (also known as the $1/day policy). Uninsured Motorist coverage is always bundled with Underinsured Motorist coverage so you pay one premium for these combined coverages. The amount of coverage purchased can be up to the limits purchased for Bodily Injury Liability coverage and should be purchased up to that amount since it is relatively inexpensive.
UM/UIM benefits cover the named insured, spouse, household relatives of the named insured who do not own an automobile, passengers in the named insured’s vehicle who do not own a motor vehicle and permissive drivers of the vehicle owned by the named insured who do not own an automobile. The amount of coverage available to any qualified claimant other than the named insured may be reduced to $15,000 in New Jersey regardless of the amount of coverage purchased by the named insured due to a “step-down” clause in the policy that typically exists.
When a named insured who has UM/UIM coverage or a person qualified to receive UM/UIM benefits under the named insured’s policy is injured in a motor vehicle accident with an at-fault uninsured vehicle or unknown vehicle (hit-and-run), a claim should be presented to the named insured’s insurance company as soon as possible. Most policies require notice of such a claim within 30 days of the accident. In any event, a lawsuit must be filed within 6 years of the accident if the claim is not resolved before then. The named insured’s insurance company will pay the claim, if warranted, usually by amicable settlement or, if not, by arbitration and/or litigation. An insurer who pays a UM claim may also seek to recover the UM payment made against the uninsured driver, called subrogation.
When a named insured is injured in a motor vehicle accident and it is determined that the at-fault party or parties have combined liability coverages less than the bodily injury coverage selected by the named insured, the at-fault party or parties are considered underinsured. The named insured can then collect from his own insurance company the difference between what the combined liability coverages of the at -fault party or parties have and their own UIM limits. For example: if the named insured is rear-ended by a motor vehicle and sustains serious injury worth $50,000, and the named insured has $50,000 UIM coverage while the negligent driver has $15,000 liability coverage, the named insured will collect the $15,000 from the negligent driver’s insurance company and $35,000 of underinsured motorist coverage from his own insurance company. In the foregoing example, the negligent driver was underinsured by $35,000. In all UIM situations, it is mandatory that the named insured’s insurance company be notified of any settlement offer from the at-fault party or parties insurance company and prior to any settlement be afforded a reasonable time in which to determine whether to allow their insured to accept the settlement and proceed with their UIM claim or pay their insured the liability settlement being offered and litigate against the at-fault party or parties.
As you can see from the above, UM/UIM coverage is extremely important to the seriously injured innocent victim of a motor vehicle accident as it is a hedge against the financially challenged at-fault party or parties. Furthermore, the mechanics of pursuing such a claim are complex and should only be handled by an experienced attorney. The above information is a brief overview of UM/UIM coverage and the laws and insurance endorsements that pertain to it and should not be construed as exhaustive. Call the lawyers at Keith Zaid Law if you have a UM/UIM claim.