WHAT IS UNDERINSURED MOTORIST COVERAGE?      The law requires the owner of every automobile registered in the State of New Jersey to purchase an automobile insurance policy with minimum liability limits of $15,000 per person/$30,000 per accident. If you are injured in an accident with a person who is legally insured with a minimum policy, the largest amount of monetary damages that you can obtain from the other person for your injuries is $15,000.     

The law permits you to insure yourself for a greater amount of money if you are injured in an accident that is caused by a person who is legally insured with a small policy limit. You can purchase underinsured motorist coverage from your own insurance company that will allow you to recover monetary damages for your own injuries up to the policy limit that you select.  

Your insurance company is required to offer you underinsured motorist coverage with limits up to $250,000 per person/$500,000 per accident or $500,000 single limit (but not to exceed your liability limits). If you are injured in an accident, the other person's automobile insurance will pay you monetary damages up to their liability limit. If you are entitled to a greater amount of money to compensate you for your injuries, your own insurance company will pay your monetary damages up to the amount of your underinsured motorist coverage.

The regulations of the New Jersey Department of Banking and Insurance require "underinsured motorist coverage" to be included with "uninsured motorist coverage". (See "What is Uninsured Motorist Coverage". Most people are insured with limits of $100,000 per person/$300,000 per accident. I recommend that you purchase the maximum uninsured/underinsured motorist coverage of $500,000 single limit.