by Steven Blader, Esq.

Stories in the news have put the spotlight on the high number of underinsured drivers on the roads. According to the Department of Banking and Insurance, an estimated 600,000 motorists in New Jersey have no insurance at all; approximately the same number carry only the legal minimum; and one million carry limits that are higher than the minimum, but have failed to keep up with inflation. This means that one in three drivers on our roads is underinsured.

The sky-high cost of automobile insurance is partly to blame. Additionally, revisions in the state’s motor vehicle code require that insurance carriers be notified of most motor vehicle offenses. Those traffic tickets often result in surcharges to the insured, which cannot be afforded by some. The correct response to the cost of insurance, however, is not to reduce your coverage.

How much auto insurance should you buy? There is no simple answer. Most people try to buy enough liability insurance to protect their assets, such as their home and savings, in case they are sued for causing an accident. If you have substantial assets, you should purchase substantial liability coverage, including excess policies of protection. You need to be certain that you do not expose yourself and your family to financial catastrophe.

What most people don’t know is that the amount of liability insurance you have determines how much uninsured/underinsured motorist insurance you are permitted to purchase. Uninsured/underinsured motorist coverage protects you if you are injured by a driver with no insurance or someone whose coverage is inadequate to compensate you for your injuries. In addition to any physical injury or property damage you might sustain, your loss of wages and employability is also covered under this clause.

Under current New Jersey law, you only can obtain uninsured/underinsured coverage up to the limits of your liability coverage. That’s why the amount of liability coverage you buy has importance beyond protecting your assets. But don’t assume that your insurance company will automatically offer to match the amount of your uninsured/underinsured coverage with your liability coverage, even though it is in your best interest. It won’t.

It is important to insist that your uninsured/underinsured protections match. If you protect others on the roadway in an amount up to $500,000, should you have liability for an accident, then protect yourself, as well, up to $500,000. Remember, uninsured/underinsured coverage protects you and your family when someone else (who happens to be uninsured or underinsured) is liable for an accident.

I have reviewed many policies with adequate liability limits ($300,000 to $500,000) but only minimum uninsured/underinsured limits (often $15,000 to $35,000). I always recommend that clients with policy deficiencies in this area increase their coverage so that the protection given to other drivers on the roadway through liability coverage is equal to the protection you may need from uninsured/underinsured motorist coverage. Adding underinsured coverage is usually less costly than you think. In many cases, for example, increasing liability and uninsured/underinsured motorist coverage from $100,000 to $500,000 on two cars may add merely $150 per year to the premium. Furthermore, if your assets warrant greater protection consider an umbrella or excess policy.

Unfortunately, accidents happen. Review your auto insurance coverage with your agent now. Don’t find out by accident that you are underinsured.

Steven Blader, a lawyer for Szaferman, Lakind, Blumstein & Blader, P.C., has headed the personal injury practice department since 1984. He concentrates in personal injury including products liability, medical malpractice and general negligence.

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