[John J. Scura III., Esq. explains the type of auto insurance coverage you should have in New Jersey]
The least explained but most important insurance in New Jersey is Uninsured and Underinsured Motorist Insurance (UM/UIM) Coverage. Insurance agents do not explain this insurance fully, leaving you potentially in trouble with not enough insurance in cases involving serious injuries.
State law in New Jersey requires that insurance companies offer Uninsured and Underinsured motorist coverage as an option up to at least $250,000 for each person and $500,000.00 covering each accident for bodily injury. Insurance companies also have to offer a $500,000 single limit option for uninsured and underinsured motorist coverage. You can also have these limits increased further by purchasing an umbrella policy.
Why have Uninsured Motorist Insurance Coverage?
Uninsured motorist coverage under your own policy is for when a person who has no insurance causes an accident with you. If this occurs, you then pursue your own insurance company under your policy for the damages caused by that uninsured person. Uninsured motorist insurance also covers the situation of the hit and run driver where you are never able to identify the vehicle that hit you - the hit and run or phantom vehicle situation. In 2015, the Insurance Research Council reported that 13.0 percent of motorists carried no insurance at all. That means that you have a 1 in 8 chance in being hit by someone without car insurance. Thus, if you only have minimum uninsured coverage and are seriously injured you and your family could be financially devastated. The percentage of uninsured drivers has been on the rise as in 2010, 12.3% of drivers had no insurance.
Why have Underinsured Motorist Insurance Coverage?
Besides the problem of persons carrying no insurance, most drivers do not have sufficient liability coverage if they injure someone. Underinsured motorist insurance coverage is insurance that covers you when someone hits you that does not have enough insurance for the full amount of damage or injury caused. This insurance is so critical because most drivers have low liability coverage in New Jersey. Liability coverage under your own policy is important, but it does not protect you if someone without enough insurance hits you. If someone with only $15,000 in insurance hits you and permanently injures you, this will not be enough to take care of you and your family. If, however, that same person hits you and you have another $500,000 in underinsured motorist coverage, then you at least have that extra cushion of money to protect you and your family.
All insurance companies have to offer as high as $500,000 in underinsured motorist coverage and there are ways to obtain more. Some insurance companies offer higher limits and you can also obtain higher limits on both underinsured motorist coverage and uninsured motorist coverage by purchasing an umbrella policy. Remember that your uninsured and underinsured motorist coverage cannot be higher than your liability coverage. Your liability coverage should also be high to cover the situation when you are at fault for the happening of the accident. Insurance is meant to truly protect those serious situations so only carrying minimal coverage makes no sense.
You also must be careful of the situation when the insurer offers liability limits higher than your uninsured and underinsured (UM/UIM) limits. For example, we are seeing more policies where the liability coverage is $100,000 but the UIM/UM coverage is only $15,000. You must watch out for this and never allow it to occur. Insurance companies do not even like to offer UM/UIM coverage and will not push it. The insurance companies do not make much more on the premium for the increased UM/UIM coverage, and of course they do not want to pay those claims - or at least they want to limit them. Protect yourself and your family and make sure you have adequate UM/UIM insurance coverage.
If you have questions about your auto insurance coverage or are involved in an accident involving personal injury, please call a New Jersey personal injury lawyer in one of our New Jersey offices in Passaic, Hudson, Essex or Bergen County.
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