What Is Uninsured and Underinsured Motorist Coverage?
Accidents happen unexpectedly, and when they do, the financial burden can be overwhelming—especially if the at-fault driver has little or no insurance. Uninsured motorist (UM) coverage protects you if you are involved in an accident caused by a driver who has no insurance or if you are the victim of a hit-and-run. Underinsured motorist (UIM) coverage applies when the at-fault driver has insurance, but their policy limits are too low to cover your damages. In both cases, your own policy steps in to cover the gap, ensuring that you and your family are not left with insurmountable medical bills and other expenses.
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.
