When you are injured in an automobile accident caused by someone else, it is important to determine how much liability insurance the other driver has. But what happens if they have no insurance or only minimum insurance? Your personal automobile insurance policy includes Uninsured and Underinsured Motorist Coverage (UM/UIM) to protect you in the event you are injured by someone with insufficient or no insurance. While your liability coverage is for the benefit of someone you may injure, your UM/UIM coverage is for your benefit when someone else injures you. Therefore, you should consider purchasing the highest UM/UIM limits you can. Your UM/UIM limits cannot exceed your liability limits. In other words, you cannot purchase more coverage for yourself than you purchase for the benefit of others.

There are various scenarios in which a vehicle can be considered uninsured. Aside from the obvious situation in which a vehicle has no liability insurance, most likely because it has lapsed or been canceled, a vehicle is also considered uninsured if it the driver flees the scene of the accident and cannot be identified; if the insurer of the vehicle is insolvent, bankrupt, or in liquidation or has denied coverage; or if it is covered by a “special policy” a policy available to qualified low-income people primarily to afford them with emergency medical coverage.

Things get a bit more complex when you are injured in an accident caused by an underinsured vehicle. In general, a vehicle is considered to be underinsured if the liability coverage on that vehicle is less than the limits of underinsured motorist coverage you have purchased. The amount you can recover under your underinsured motorist coverage is reduced by the amount you recover from the other driver. For example, let’s say the car that hits you has $15,000 in liability coverage, and your underinsured motorist coverage is $50,000. The most you can recover from both policies would be $50,000: $15,000 from the car that caused the accident and $35,000 from your policy. This is because your coverage is actually the difference between what you purchased and the amount of the other car’s liability policy.

In some states, if there are multiple policies in a household, a person injured in an accident caused by an uninsured or underinsured motorist can “stack” the policies, which means they can add up all of the uninsured or underinsured motorist coverage in the household and have available coverage up to the total. In New Jersey, however, stacking is not permitted. Therefore, if there are multiple policies in a household, the maximum coverage available would be the highest limit of all the policies, and then each policy would contribute on a pro rata basis.

There are many situations that don’t fall squarely within these rules, and our courts have been called upon time and time again to determine what coverage is available in a given situation. If you have any questions about uninsured or underinsured motorist coverage, or about any kind of accident or workplace injury, call us for a free, no-obligation consultation.