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Uninsured Motorist coverage is the term used when there is no coverage at all on the other vehicle. Underinsured Motorist coverage is the term used when the other vehicle's policy limit is inadequate to pay for all your damages.
Provided you have a Standard Policy, your own insurance company may pay for damages to your vehicle caused by:
- any person or organization who did not have liability insurance at the time of the accident.
- any person or organization who had adequate liability insurance coverage at the time of the accident, but for some reason, the company writing the insurance denies that their policy provides coverage for the loss.
- any person or organization who did not carry enough insurance to pay for your damages in full.
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Things to note...
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You are only eligible to receive reimbursement of underinsured motorist benefits if your Underinsured Motorist Coverage limits are higher than the Liability Coverage limits of the other driver.
All Uninsured and Underinsured Motorist Property Damage claims require you to pay a $500 policy deductible.
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If you only have a Basic Policy, you do not have any protection if your vehicle is damaged by either an uninsured or underinsured driver. The minimum limit for Uninsured/Underinsured Motorist Property Damage coverage is $5,000 but you can buy higher limits. However, in no event can your Uninsured/Underinsured Motorist Coverage limits be higher than your own Liability Coverage limits.
When filing an Uninsured/Underinsured Motorist claim it is important to remember that your company "stands in the shoes" of the Uninsured/Underinsured driver and will only pay your claim if the other driver was legally responsible for your damages, or in other words, at-fault for the accident. Under New Jersey’s Comparative Negligence law, you can only collect damages if your degree of liability does not exceed that of other driver(s) in the accident.
As comparative negligence allows for more than one person to be at fault for an accident, your company can reduce the settlement of your Uninsured/Underinsured Motorist claim by any percentage of fault that may be attributable to you.
What happens if after being involved in an accident with another driver you find out from their insurance company that they did not carry any insurance? You then submit your damages totaling $10,000, to your own company for reimbursement under Uninsured Motorist. Your company investigates the claim and determines that the uninsured driver was 80% at-fault for the accident and you were 20% responsible. Under these circumstances, your company would be responsible for 80% of your damages up to the limits on your policy, or $8,000, and would end up paying you $7,500 after applying the $500 policy deductible.
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