Uninsured and Underinsured Motorist Coverage in New Jersey

Driving as an uninsured motorist in New Jersey is illegal, as all drivers must have some auto insurance coverage. Whether you’re heading to Ocean City for a weekend of amusements, Cape May for a visit to the oldest seaside resort in the country, or the Delaware Water Gap for some outdoor fun, there are plenty of things for locals to do in the Garden State as long as they have an active and adequate New Jersey auto insurance policy.

Some drivers in the Garden State must have a minimum limit of uninsured and underinsured motorist coverages, but not all drivers. Let’s take a look at why some require this coverage while others don’t, how this coverage protects drivers on New Jersey’s roads, and how you can understand the nuances of your policy.

In New Jersey, auto insurance is legally required for all drivers, but not all drivers must carry uninsured motorist coverage (UM). The coverage type, also lumped together with underinsured motorist coverage (UIM, UM/UIM), helps cover a policyholder’s expenses should they be in an accident caused by a driver who lacks sufficient coverage to cover the policyholder’s costs.

Since New Jersey is a no-fault state, drivers involved in an accident with an uninsured driver will always first default to their mandatory personal injury protection, or PIP coverage. This coverage helps policyholders cover their medical expenses regardless of who caused the accident. However, some policies won’t have enough PIP to cover the entirety of one’s medical bills, so to pay the difference, one may invoke UM/UIM coverage.

While UM covers the policyholder’s expenses if the at-fault driver is uninsured, UIM helps cover the policyholder’s costs if the at-fault driver doesn’t have enough coverage on their policy to cover the policyholder’s bills. Generally, one will invoke their UIM coverage after maxing out their PIP and the at-fault driver’s liability coverage. Lumping it in with UM coverage is misleading, as the at-fault driver must be insured for a policyholder to invoke their UIM coverage.

In New Jersey, uninsured motorist coverage isn’t required for all drivers but is required for some. Drivers in the Garden State must meet the minimum requirements for the policy they select, either a basic or a standard policy. Basic policies don’t have a minimum requirement for UM coverage, but standard policies do. 

Auto insurance laws in the Garden State require all drivers with basic policies to have at least $10,000 in bodily injury liability per accident, $5,000 in property damage liability per accident, and $15,000 in personal injury protection (PIP) per accident. 

Those with standard policies, however, must have at least $25,000 in bodily injury liability per person, $50,000 in bodily injury liability per accident, $25,000 in property damage liability per accident (25/50/25 liability coverage), the same 25/50/25 limit of uninsured and underinsured motorist coverage (UM/UIM), and $15,000 in PIP. Those who lease or finance their vehicles may be legally required to maintain comprehensive and collision coverages on their policies. 

Drivers with basic auto insurance policies have some protection regarding their medical expenses in the event of an accident with an uninsured driver, but not so much for vehicle repairs. Uninsured motorist property damage in New Jersey isn’t required on basic auto insurance policies, so many drivers don’t have any coverage for such a situation.

While drivers don’t need to carry UM/UIM if they have a basic policy, it’s not always the safest choice to carry only the minimum coverage required in the state. Sure, a minimum coverage policy will often be the cheapest policy in the state, but drivers with such little coverage lack protection when it matters most.

Many drivers in the Garden State opt for a full coverage policy with one of the state’s top insurers to ensure they have enough coverage to feel comfortable behind the wheel without breaking the bank. The average full coverage policy in the state costs about $1,900 annually, which is about 10% higher than the national average of $1,670 annually. However, while New Jersey may be one of the country’s most expensive states for auto insurance, some insurers in the state offer base rates nearly 45% below the average rate.

According to the New Jersey uninsured motorist law, only some drivers are required to carry underinsured motorist coverage. In the Garden State, drivers can choose from one of two policies to carry. A basic policy, which contains the most minimal coverage a driver can carry in the state while remaining legally insured, doesn’t require drivers to have either UM or UIM coverage. A standard policy, however, does.

While some drivers don’t legally need UIM coverage, it can be a helpful coverage type to have on one’s policy. UIM helps a policyholder considered the victim in an accident cover their medical expenses or vehicle repairs once the at-fault party’s liability coverage runs out. The at-fault party must carry an active and adequate policy for the victim to invoke their UIM coverage to cover the remainder of their expenses.

While UIM can be an important coverage, it’s more important in tort states than in no-fault states. In no-fault states, like the Garden State, drivers will default to their PIP coverage to help pay for their medical expenses. Then, once their PIP coverage has maxed out, policyholders may invoke the at-fault driver’s liability coverage to cover the remainder of their bills. If the injured policyholder still has remaining medical expenses, debts, or outstanding costs for their vehicle repairs, they would invoke their UIM. Essentially, UIM is third-in-command when it comes to coverage for one’s medical expenses and second-in-command for vehicle repairs. 

Drivers with full coverage policies may also use their medical payments coverage (MedPay) to help them cover their medical expenses. To help cover vehicle repairs, drivers with full coverage policies could invoke their collision coverage or comprehensive coverage, depending on the accident.

In New Jersey, the uninsured motorist statute requires all drivers to maintain a minimum amount of insurance coverage at all times. If an uninsured driver is injured in an accident with an insured driver, the uninsured victim can invoke the at-fault policyholder’s liability coverage to cover their medical expenses and vehicle repairs, but they can’t sue the at-fault driver for non-economic losses, like damages or pain and suffering. 

Drivers who lack sufficient coverage may face severe legal and financial penalties. While those uninsured as a victim of an accident may be able to rely on the at-fault driver’s liability coverage, any costs exceeding the at-fault driver’s policy limits must come out of the uninsured driver’s pocket. 

If two insured drivers were involved in an accident, the victim could sue the at-fault driver once insurance benefits are maxed out. However, uninsured drivers have limited abilities when it comes to pursuing legal action, so an uninsured accident victim likely won’t be able to pursue further coverage from the at-fault driver than their insurance policy.

If an uninsured driver caused an accident with an insured policyholder, that policyholder would first default to their PIP coverage for their medical expenses, then use their UM coverage for any remaining costs. Should the policyholder max out their insurance benefits before paying off all their accident expenses or debts, they may seek legal action with the uninsured driver.

It’s essential to remember that driving without insurance in the Garden State is illegal and carries severe consequences. The legal penalties for failing to carry sufficient coverage may be fines, license and registration suspension, vehicle impoundment, or even jail time. The severity and frequency of the offense will dictate the legal repercussions.

The legal penalties aren’t the only consequences for driving without insurance. Those who fail to carry adequate coverage may also face severe financial consequences, as they’re on the hook for all the medical expenses not covered by insurance for everyone involved in the accident. Plus, they may need to pay legal defense fees should the injured policyholder decide to sue for damages.

Insurers may also penalize those who fail to comply with mandatory insurance minimums. Generally, drivers with a poor insurance history are considered high-risk and will pay above-average premiums to compensate for this risk. While SR-22 insurance isn’t available in New Jersey, high-risk drivers may have to jump through other hoops to maintain their insurance policy in the Garden State.

Whether you’re curious about the New Jersey uninsured motorist fund, policies for those with a poor insurance history, or increasing your UM/UIM coverage, the best way to see all the rates you’re eligible for is to get and compare auto insurance quotes online. By getting and comparing quotes from several insurers, you can see everything in one place and make the best decision about your policy for your lifestyle.

Luckily, here at Clovered, we have you covered. We have a free quoting tool you can use to access your unique quotes quickly. If you’d rather speak with an agent about your quotes, you can contact one of our licensed agents at 833-255-4117 or [email protected].