Mike’s Quick Answer
It depends on every potentially applicable policy, but often the at-fault driver's insurer is responsible only up to its liability limits and underinsured motorist coverage may provide another source of recovery. In New Jersey, the UIM limit generally must be higher than the at-fault driver's liability limit. A proposed policy-limits settlement and release should be reviewed before acceptance so a possible UIM claim is not impaired.
The At-Fault Policy Is Only the First Place to Look
Liability insurance does not guarantee that enough money exists to compensate an injured person fully. A policy has a per-person limit and often a separate per-accident limit shared by everyone injured in the same crash. Once the applicable limit is exhausted, the liability carrier generally has no obligation to pay beyond the policy.
That does not necessarily end the investigation. The driver may have other insurance, the vehicle owner may be separately insured, an employer may be responsible, or a commercial, rideshare, delivery, or umbrella policy may apply. The first policy disclosed is not always the only policy available.
How Underinsured Motorist Coverage Works
Underinsured motorist coverage, commonly called UIM, is coverage purchased to protect you and other covered people when the responsible driver has insurance but not enough of it. A UIM claim is made against an insurance company that issued coverage protecting the injured person.
New Jersey's Department of Banking and Insurance explains that a claimant is eligible for UIM benefits only when the UIM limit is higher than the at-fault driver's liability limit. The maximum UIM layer is generally calculated by subtracting the available liability limit from the applicable UIM limit.
A Simple Example
Assume the responsible driver has $50,000 in bodily-injury liability coverage and the injured person has $250,000 in applicable UIM coverage. If the injuries and damages justify it, the liability carrier may pay up to $50,000 and the potential UIM layer may be up to $200,000.
That does not guarantee a $250,000 recovery. Fault, comparative negligence, medical proof, permanency, causation, policy language, exclusions, offsets, and the amount of legally recoverable damages still matter. UIM creates another potential source of coverage, not an automatic payment.
Which Policy May Cover You?
The policy on the vehicle occupied at the time of the crash is an obvious starting point, but it may not be the end of the analysis. Coverage can depend on whether the injured person is the named insured, a resident relative, an occupant of a covered vehicle, or otherwise included within the policy's definition of an insured.
Household policies, employer policies, commercial policies, and umbrella or excess coverage should be identified. A Basic Policy may not provide UM or UIM protection, while a Standard Policy generally includes or offers it within the limits permitted by New Jersey law. The declarations pages and complete policy forms should be obtained and reviewed.
Do Not Sign Away the UIM Claim
Before accepting the at-fault carrier's policy-limit offer, the UIM carrier should receive proper written notice and the documents necessary to evaluate the proposed settlement. New Jersey's established procedure gives the UIM carrier an opportunity to protect any subrogation rights it may have against the responsible party.
Signing a release too early can create a coverage dispute. The wording matters. A release may extend beyond the individual driver and unintentionally discharge a vehicle owner, employer, business, or other party whose coverage has not been fully investigated.
Your Own Carrier Can Still Contest the Claim
People are sometimes surprised that their own insurance company does not simply pay the UIM limit. In a UIM claim, the carrier may dispute fault, the seriousness of the injuries, whether treatment was related to the crash, the value of the damages, and whether the claimant complied with the policy.
The claim should be prepared with the same care as the case against the at-fault driver. That includes preserving physical evidence, documenting the injuries and treatment, obtaining wage-loss proof, identifying prior medical issues honestly, and meeting all notice and filing deadlines.
What Mike Would Check Immediately
I would want the crash report, the at-fault driver's declarations page or certified limits disclosure, your declarations page, every household auto policy, information about the vehicle's owner, and facts showing whether any person was working or driving for a business.
I would also want to know whether multiple people were injured, because a per-accident limit may need to be divided. Coverage work should begin early, before a release is signed and before evidence needed to establish another responsible party disappears.
Frequently Asked Questions
Can I make a UIM claim if the other driver has insurance?
It depends on the applicable policies and limits. Often that is precisely when UIM coverage matters: the other driver has insurance, but the available liability limit may not be enough. In New Jersey, the applicable UIM limit generally must be higher than the other driver's liability limit.
Will making a UIM claim mean I am suing my own insurance company?
It depends on how the claim develops. Often it starts as a contractual insurance claim. If fault, damages, coverage, or compliance with the policy cannot be resolved, formal litigation or another dispute-resolution process may become necessary.
Can I accept the other driver's policy limits first and deal with UIM later?
It depends on the policy and notice history, but often the UIM carrier should receive required notice before settlement and the release should be reviewed carefully. Acting first and investigating later can create a coverage dispute.
What if I have a Basic Policy?
It depends on every applicable policy, but New Jersey's Basic Policy often does not provide the same UM or UIM protection available under a Standard Policy. Other policies and responsible parties still need to be investigated.
Sources and Further Reading
Important
This article provides general New Jersey information and is not legal advice. Every matter depends on its facts, policy language, deadlines, and applicable law. Medical questions should be discussed with a licensed physician. Tax questions should be discussed with a qualified tax professional.