Uninsured Motorist Coverage (UM)
A tortfeasor’s vehicle is considered “uninsured” triggering a right to UM coverage in five (5) scenarios: (1) when the vehicle is not covered by a policy of insurance on the date of the accident; (2) when the tortfeasor’s carrier disclaims coverage; (3) when the tortfeasor’s carrier becomes insolvent or declares bankruptcy; (4) when the vehicle is a “hit and run” vehicle; or (5) when the vehicle is covered by a “special” automobile policy pursuant to 545 of L.2003 c. 89. N.J.S.A. 17:28-1.1(e)(2). Underinsured vehicles, uninsured vehicles owned by the claimant, self-insured vehicles, vehicles covered by a “basic” policy, and publicly owned vehicles are not considered uninsured. Id.
By far, the most common of these five (5) scenarios involves hit and run accidents. A hit and run vehicle is one as to which “the identity of the motor vehicle and of the operator and owner thereof cannot be ascertained or it is established that the motor vehicle was, at the time said accident occurred, in the possession of some person other than the owner without the owner’s consent and that the identity of such person cannot be ascertained[.]” N.J.S.A. 39:6-78. “Hit and run” vehicles include phantom vehicles, or vehicles that force a claimant off the road without making physical contact with your vehicle. In order to assert a UM claim based on an accident caused by a hit and run driver, you must demonstrate that you made reasonable efforts to determine the identity of the vehicle, its owner and its operator. Scheckel v. State Farm Mut., 316 N.J. Super. 326, 332-334 (App. Div. 1998).
Underinsured Motorist Coverage (UIM)
In New Jersey, a tortfeasor’s vehicle is only considered “underinsured when the sum of the limits of liability under all bodily injury and property damage liability bonds and insurance policies available [to the tortfeasor] is, at the time of the accident, less than the applicable limits for underinsured motorist coverage afforded under the motor vehicle insurance policy held by the person seeking…recovery.” French v. New Jersey School Bd. Assoc. Ins. Group, 149 N.J. 478, 484 (1997); N.J.S.A. 17:28-1.1e.
In order to determine whether UIM coverage is triggered, it is thus necessary to compare the liability limits of any policies that the tortfeasor may look to for coverage (including his or her personal policy, the policy of a host vehicle, or any umbrella or general liability policies) with the UIM limits of any policies purchased by or providing coverage to the injured party (including his or her personal policy, the policy of a family member residing in the household, or the policy of a host vehicle). See Magnifico v. Rutgers Casualty Ins. Co., 153 N.J. 406 (1998) (holding passenger “held” and was entitled to recover UIM benefits under $250,000 policy issued to driver of host vehicle); New Jersey Manufacturer’s Insurance Co. v. Breen, 153 N.J. 424 (1998) (holding daughter of named insureds under business auto policy, who was injured in an auto accident while operating her own vehicle, “held” and was entitled to receive benefit of UIM coverage included in her parents’ business auto policy that would not have been available pursuant to her personal policy); Grant v. Amica Mutual Ins. Co., 153 N.J. 433 (1998) (holding motorist who was injured in accident while driving his own car “held” and entitled to recover UIM benefits under automobile policy issued to his brother, with whom motorist lived).
A vehicle is not considered underinsured “unless all the limits of bodily injury liability insurance or bonds applicable at the time of the accident have been exhausted by payment of settlements or judgments.”N.J.S.A. 17:28-1.1(e)(1). The UIM carrier is entitled to a credit against the amount that was recovered against the tortfeasor’s liability policies. Id. So, for example when the UM/UIM limits of a tortfeasor’s insurance policy are $15,000/$30,000 and the bodily injury limits in your policy are $250,000/$500,00, the tortfeasor is underinsured and you are entitled to coverage under your own policy!
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