What Is Uninsured and Underinsured Motorist Coverage?

Why This Coverage Is Essential

Next to covering medical expenses, uninsured and underinsured motorist coverage is arguably the most important part of your auto insurance policy. It provides protection for you and your household members, ensuring financial security in the event of an accident caused by a driver with insufficient insurance to pay for pain & suffering damages and loss of wages.



Shockingly, about 85% of drivers in New Jersey either carry minimal insurance coverage or none at all. Many opt for "basic" or "dollar-a-day" policies that provide little to no protection for serious accidents. The state’s minimum liability coverage—$15,000 per person and $30,000 per accident—is often not enough to cover pain & suffering, lost wages, and other damages. Having adequate UM and UIM coverage can make a significant difference in securing proper compensation for injuries.

Common Misconceptions About UM/UIM Coverage

Many people purchase auto insurance based solely on who has the lowest price, often unaware of what they are sacrificing. Unlike in the past, when insurance agents would explain coverage options in detail, most policies today are purchased online or over the phone, with little guidance on coverage details. Consumers frequently misunderstand UM/UIM coverage and may not realize that increasing these limits is relatively inexpensive compared to other aspects of an insurance policy.

Additionally, many drivers do not know that they can only purchase as much UM/UIM coverage as they have in liability coverage. This means that if your liability coverage is low, your ability to protect yourself and your family through UM/UIM coverage is also limited. Unfortunately, insurance companies do not always automatically match UM/UIM coverage to your liability limits, meaning policyholders may be unknowingly underinsured.

How Uninsured and Underinsured Motorist Coverage Works

When involved in an accident with an uninsured driver, your UM coverage takes effect, covering what the uninsured driver owes you including compensation for pain & suffering, lost wages, and other damages up to your policy’s limits. This also applies in hit-and-run accidents where the at-fault driver flees the scene.

For underinsured motorists, once the at-fault driver’s insurance has paid out its policy limit (for example, $15,000 in a minimal coverage policy), your UIM coverage will kick in to cover the remaining damages up to your policy’s maximum. To initiate a claim, you must notify your insurance company that you are pursuing UIM benefits. Having a knowledgeable attorney to navigate this process can be critical in ensuring you receive the full compensation you are entitled to.

Real-Life Example: How UM/UIM Coverage Makes a Difference

Consider the case of two sisters who were pedestrians struck by a vehicle. Neither owned a car, but they both lived with family members who had auto insurance. One sister’s household policy included substantial UIM coverage, allowing her to recover up to $250,000 for her injuries. The other sister, whose household had only $25,000 in coverage, was limited to that much smaller amount. These cases illustrate how a well-structured insurance policy can significantly impact the outcome of a personal injury claim.

Protect Yourself and Your Family

Ensuring that you have adequate UM/UIM coverage is one of the most important steps you can take to protect yourself and your loved ones. Many drivers focus on meeting the legal minimum requirements without realizing how little protection that provides. By increasing your coverage limits, you can safeguard your financial future in the event of an accident.