Getting into an accident with an uninsured driver can be a serious problem because they usually can’t afford to compensate victims. Although New Jersey requires all drivers to carry car insurance, accidents with uninsured drivers remain common. According to one study, 14.9% of drivers in New Jersey are driving without insurance.
Even when the driver at fault does have car insurance, it still may not be enough to compensate victims. Uninsured and underinsured motorist coverage allows accident victims to receive compensation even when the driver who injured them does not have insurance, or enough insurance, to cover the injuries.
In addition to the standard uninsured and underinsured motorist coverage that a car insurance policy can include, it’s also possible to include excess coverage in an umbrella insurance policy. This option can dramatically expand one’s protection from uninsured and underinsured motorist accidents.
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What Are Uninsured and Underinsured Motorist Coverage?
Uninsured Motorist (UM) and Underinsured Motorist (UIM) are a type of optional coverage that can be included in a car insurance policy. Anyone buying a standard car insurance policy can buy up to $250,000 per person or $500,000 per accident worth of UM and UIM coverage.
Understanding how UM and UIM work requires some explanation of how car insurance in New Jersey works. In any car accident, a policyholder first receives compensation for their injuries from their own Personal Injury Protection (PIP) coverage. PIP benefits are available no matter who is at fault for an accident and do not require a lawsuit against the other driver.
However, PIP has a policy limit (which can be as low as $15,000) and only covers economic injuries like medical bills and lost work, not things like pain and suffering. It’s common for major accidents to produce very serious injuries that PIP can’t fully cover. When this happens, the victim can only receive compensation by suing the driver at fault.
Whether the other driver is found liable at trial or agrees to a settlement, they become responsible for paying for the injuries of those they have injured. However, it’s common for the driver at fault not to have enough money to actually pay for the injuries they’ve caused, especially if the injuries are severe. If that driver has Bodily Injury Liability coverage on their car insurance policy, it pays for any of these injuries.
As a practical matter, though, it’s common for this Bodily Injury Liability coverage to be unavailable. Basic policies don’t require Bodily Injury Liability coverage at all. Even if a driver does have Bodily Injury Liability coverage, the policy limit may be too low to cover the entire claim. It’s also possible that a driver might be entirely uninsured, or never identified in the case of a hit-and-run accident.
UM and UIM come into play when the other driver’s insurance is either unavailable or insufficient to cover their liability to the policyholder. UM or UIM makes up the difference between what the other driver owes and what the other driver’s insurance policy will pay.
For example, a policyholder with $250,000 in PIP coverage and $250,000 in UM/UIM coverage is involved in a car accident with another driver who was at fault for the accident and the policyholder suffers $400,000 worth of injuries. The driver at fault only has $10,000 in Bodily Injury Liability coverage. In this situation, the policyholder’s PIP covers the first $250,000, the at-fault driver’s Bodily Injury Liability pays $10,000, and the policyholder’s UIM covers the remaining $140,000 in injuries.
What Do Uninsured and Underinsured Motorist Policies Cover?
UM and UIM are substitutes for what a policyholder would be able to get from a settlement or jury verdict. So, unlike PIP coverage, they cover any kind of loss from a car accident injury, not just medical bills and lost wages. Things covered by UM and UIM include:
- Medical bills, both past and future
- Lost wages due to missing work
- Pain and suffering
- Lifestyle changes
For those who own both a home and a car, umbrella insurance can provide additional protection in the event of an accident with an uninsured or underinsured driver. Umbrella insurance is an additional policy that anyone with both home and auto insurance can buy.
Umbrella coverage normally provides additional liability coverage for injuries a policyholder accidentally causes. However, many insurers also sell additional UM and UIM coverage as part of an umbrella policy, which can allow a policyholder to add up to $1,000,000 worth of UM or UIM coverage on top of what’s included in their car insurance policy. This excess coverage then becomes available to pay for any UM/UIM claim that exceeds the policy limit on the auto insurance policy’s UM/UIM coverage.
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Frequently Asked Questions
It’s still a good idea to have uninsured motorist coverage even if you have health insurance. Health insurance will only cover medical bills, but the costs of a severe car accident can involve far more than just medical bills, such as disability or pain and suffering.
It’s a good idea to have a lawyer for a UM or UIM claim. UM and UIM claims often involve difficult-to-calculate amounts, like pain and suffering, and a lawyer can make the strongest argument to the insurance company that you deserve more compensation.
Uninsured motorist coverage applies when the driver at fault either doesn’t have insurance or was never identified. Underinsured motorist coverage applies when the driver at fault does have insurance, but not enough to cover the full cost of the accident.
What Should I Do if I’ve Been Injured by an Uninsured or Underinsured Driver?
If you’ve been injured by an uninsured or underinsured driver, contact Rosenblum Law today for a free consultation today. Our experienced personal injury attorneys can evaluate your situation and your insurance policy to see if a UM or UIM claim is the best way to receive compensation. Call 888-815-3649 or email us today.