What If the Driver Is Underinsured in New Jersey?

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Car accidents are already a difficult experience, but that stress can escalate when you find out the driver who caused your crash doesn’t have enough insurance to cover the damage. If you’re in New Jersey — where insurance laws are unique and can be confusing — it’s critical to know how to handle the situation. This guide will walk you through exactly what to do if the at-fault driver is underinsured, how Underinsured Motorist Coverage (UIM) works in New Jersey, and how to explore your legal options if your damages exceed insurance limits.

Whether you’re dealing with vehicle repairs, medical bills, or lost wages, this guide is designed to provide clear, practical steps to protect yourself, recover financially, and understand the claims process in-depth.

 

What Does It Mean When a Driver Is Underinsured?

In basic terms, an underinsured driver is someone who has car insurance — but not enough to pay for the full extent of the damages they caused in an accident. In New Jersey, drivers are only required to carry the minimum liability coverage of $15,000 per person and $30,000 per accident for bodily injury. Unfortunately, in many accidents, that amount isn’t enough to cover medical expenses, let alone lost income or vehicle damage.

For example, if you suffer a serious injury requiring surgery and hospitalization that results in $50,000 in medical costs, and the at-fault driver’s policy only covers $15,000, that leaves a $35,000 shortfall. Unless you have additional insurance or take legal action, you may be responsible for covering that gap yourself.

This is where Underinsured Motorist Coverage becomes critical.

 

Understanding Underinsured Motorist Coverage (UIM) in New Jersey

UIM coverage is a provision in your own auto insurance policy that kicks in when the driver who caused the accident doesn’t have enough coverage to pay for all your damages. UIM is not mandatory in New Jersey, but many drivers wisely include it in their policies for additional protection.

What Does UIM Cover?

UIM coverage typically helps pay for:

1. Medical expenses beyond the at-fault driver’s policy
2. Lost wages if you’re unable to work
3. Pain and suffering
4. Rehabilitation and future care expenses
5. Some out-of-pocket costs, like travel to medical appointments

The goal of UIM coverage is to help you recover the difference between what you’re owed and what the at-fault driver’s insurance can provide — up to the limits of your own UIM policy.

For example, if the at-fault driver has $25,000 in liability coverage and your damages total $75,000, and you have $100,000 in UIM coverage, you could file a UIM claim to recover the remaining $50,000.

UIM vs. Uninsured Motorist (UM) Coverage

It’s easy to confuse UIM with Uninsured Motorist Coverage, but they serve slightly different purposes. UM coverage applies when the other driver has no insurance at all, while UIM applies when the other driver is insured but lacks sufficient coverage to fully compensate you.

Both coverages are optional in New Jersey but are highly recommended.

 

New Jersey’s Comparative Negligence and Auto Insurance Rules

New Jersey is a no-fault state, meaning your own insurance company generally pays for medical expenses up to your Personal Injury Protection (PIP) limits, regardless of who caused the accident. However, when injuries or losses exceed PIP limits, or you want to pursue compensation for pain and suffering, the situation gets more complex.

How Fault Affects Your Compensation

New Jersey uses a modified comparative negligence rule. If you are found partially responsible for the accident, your compensation may be reduced accordingly. For example, if your total damages are $100,000 and you’re deemed 20% at fault, you’ll only be able to recover $80,000.

You cannot recover any compensation if you’re more than 50% at fault, so fault allocation is a critical factor in your ability to make a successful claim.

Why This Matters in Underinsured Driver Cases

Insurance companies often use comparative negligence to minimize how much they pay, both on the at-fault driver’s side and during UIM negotiations with your insurer. That’s why gathering evidence and working with an experienced attorney is vital — to ensure your fault is accurately assessed and your claim is properly valued.

 

Filing an Underinsured Motorist Claim in NJ

Filing a UIM claim in New Jersey involves several steps, and timing can be crucial. You must first exhaust the at-fault driver’s liability limits before turning to your own policy.

When to File a UIM Claim

You should consider filing a UIM claim when:

• The at-fault driver’s insurer has made a payment that doesn’t fully cover your losses
• Your medical costs, lost income, and other damages exceed what you’ve received
• You’ve gathered documentation to prove the shortfall

How to File a UIM Claim

1. Notify your insurance provider that you intend to file a UIM claim. This should be done as soon as you realize the at-fault driver is underinsured.
2. Obtain written confirmation of the at-fault driver’s policy limits and settlement.
3. Submit all documentation related to your damages: medical bills, repair estimates, proof of lost income, and personal impact statements.
4. Formally request UIM compensation through your policy, citing the underinsured nature of the other party.
5. If your insurer disputes your claim or offers less than you believe is fair, you may proceed to binding arbitration or litigation, depending on the terms of your policy.

Keep in mind that New Jersey imposes a two-year statute of limitations on personal injury claims, including those involving UIM benefits, so time is of the essence.

 

Legal Options If the At-Fault Driver’s Insurance Isn’t Enough

When your medical expenses and losses are substantial, even the combination of the at-fault driver’s liability coverage and your UIM policy might not cover everything. In these cases, you may need to pursue legal action.

Can You Sue the Underinsured Driver?

Yes, you may sue the at-fault driver personally to recover the remaining balance. However, this is often challenging, as underinsured drivers typically don’t have significant assets, which may limit your ability to collect on a judgment.

Legal action may still be warranted if:

• The driver acted recklessly (e.g., drunk driving)
• The crash resulted in permanent injury or disability
• There’s a dispute over the insurance payout
• You need leverage to negotiate a fair settlement

Consulting with a personal injury attorney can help you evaluate whether a lawsuit is likely to result in a collectible judgment or is worth pursuing.

 

What If My Bills Exceed All Available Insurance?

In serious accidents, your total losses might go well beyond the other driver’s policy and even your UIM limits. This is unfortunately not uncommon, especially if you’ve suffered long-term injuries, needed surgery, or missed months of work.

Additional Avenues for Compensation

In these cases, you may turn to:

1. Personal Injury Protection (PIP): This is your first line of defense and covers medical bills regardless of fault, up to your policy’s limits.
2. Health insurance: Once your PIP and auto insurance have been exhausted, your health plan may cover ongoing treatment.
3. Disability or workers’ comp: If your injury occurred during work or has caused a long-term disability.
4. Civil court: Suing the at-fault driver or other liable parties, such as a commercial vehicle owner or employer, may offer additional recovery.

 

How to Maximize Your Recovery After an Underinsured Accident

Getting the most from your UIM and legal options starts with detailed documentation. Start building your case the moment the accident occurs.

Key Steps to Strengthen Your Claim

1. Gather police reports and witness statements
2. Take photos of the accident scene and your injuries
3. Keep receipts and medical records
4. Document missed work and lost income
5. Track recovery through a pain journal or calendar
6. Consult with an experienced personal injury attorney

These actions not only help your UIM claim but will also support your case if legal action becomes necessary.

 

Frequently Asked Questions (FAQs)

Can I recover compensation beyond what the at-fault driver’s insurance provides?
Yes, if the damages from your accident exceed the at-fault driver’s liability limits, you can seek compensation through your own insurance policy if it includes underinsured motorist (UIM) coverage. This allows you to recover the difference between the other driver’s policy limits and the actual value of your injuries and losses, up to the limits of your own UIM policy. If UIM coverage is not available or insufficient, you may also consider filing a personal injury lawsuit against the at-fault driver to pursue the remaining damages.

Is underinsured motorist (UIM) coverage required in New Jersey?
No, UIM coverage is not legally required in New Jersey. However, it is strongly recommended. Given that New Jersey’s minimum liability coverage is relatively low, many drivers opt for UIM coverage as a financial safeguard. Without UIM, you may have limited options if you’re hit by a driver whose insurance doesn’t cover your full medical expenses, property damage, or income losses.

What’s the difference between uninsured and underinsured motorist coverage?
Uninsured motorist (UM) coverage applies when the driver who caused the accident has no insurance at all. Underinsured motorist (UIM) coverage applies when the at-fault driver has insurance, but it isn’t enough to fully compensate you for your injuries or losses. While they are separate types of coverage, they are often offered together in auto insurance policies in New Jersey.

How do I know if I have UIM coverage?
You can confirm whether your policy includes UIM coverage by reviewing your declarations page or speaking with your insurance agent. It is usually listed as a separate line item, with stated coverage limits. If you’re unsure how to interpret the policy language, a personal injury attorney or insurance professional can help you understand your benefits.

What if my underinsured motorist claim is denied by my insurer?
If your UIM claim is denied, you have the right to dispute the decision. Start by requesting a written explanation of the denial. You can then challenge the decision through your insurance company’s internal appeal process. If that fails, you may proceed to binding arbitration or litigation, depending on your policy terms. In such cases, having legal representation can significantly improve your chances of obtaining a fair outcome.

 

Know Your Rights, Protect Your Future

If you’ve been hit by an underinsured driver in New Jersey, the road to financial recovery may seem overwhelming — but you do have options. Whether it’s through your own UIM coverage, additional insurance provisions, or legal action, there are ways to be compensated for your losses.

Don’t assume you have to settle for less than what you deserve. These situations are complex, and insurance companies don’t always act in your best interest. Getting professional guidance can make all the difference in the outcome of your case.

 

Contact The Epstein Law Firm, P.A., Today

If you’re dealing with the aftermath of a car accident and the at-fault driver doesn’t have enough insurance, schedule a free consultation with us today. Our qualified lawyer can help you understand your policy, navigate UIM claims, and pursue full compensation for your injuries and losses.

Don’t wait — time limits apply, and the sooner you act, the stronger your case will be.