Published November 1, 2026 · Morris Starkman
Find the underinsured number on your declarations page
Most people know their liability limits. Almost nobody knows the line below it: uninsured/underinsured motorist coverage, often written "UM/UIM." It pays you when someone else causes the crash and cannot cover what you lost. In a serious injury case, it is often the largest check available.
New Jersey sets a floor. Under N.J.S.A. 17:28-1.1, a standard policy issued or renewed on or after January 1, 2026 must carry at least $35,000 per person and $70,000 per accident for bodily injury. A basic policy is excepted from that requirement. That floor is thin. Plenty of hospital stays cost more.
Know when a driver counts as underinsured
The statute gives a precise test. A vehicle is underinsured when the total liability limits available to the at-fault driver are "less than the applicable limits for underinsured motorist coverage" on your policy. The comparison is limit against limit. It is not your damages against their policy.
Two consequences follow:
- If you carry $35,000 and the other driver carries $35,000, that driver is not underinsured. You have no UIM claim, however badly you were hurt.
- If you carry $100,000 and the other driver carries $35,000, that driver is underinsured.
The test also requires that the at-fault driver's bodily injury limits "have been exhausted by payment of settlements or judgments." You collect from them first.
Do the subtraction before you celebrate
The statute also says your UIM limit "shall be reduced by the amount he has recovered" from the at-fault driver's liability coverage. Here is a made-up example, not a prediction:
- You carry $100,000 in UIM coverage.
- The other driver carries $35,000 and the insurer pays it.
- Your UIM coverage is $100,000 minus $35,000. That leaves $65,000.
Your total from both policies tops out at $100,000, no matter what the jury says your harm was worth. The state's Department of Banking and Insurance puts it the same way: your claim cannot exceed the difference between your limit and the other driver's.
Raise your liability limit to raise your UIM limit
You cannot buy UIM coverage above your own liability coverage. The statute says UM/UIM limits "shall not exceed the insured's motor vehicle liability policy limits." Insurers must offer UM/UIM up to at least $250,000 per person and $500,000 per accident on a standard policy, but never higher than your liability limits.
So the way to protect yourself is to raise the liability limit. That feels backwards. You are buying coverage that protects the other person. It also lifts the ceiling on the coverage that protects you.
Do not count on stacking
In some states you add the coverage on each car. Not here. N.J.S.A. 17:28-1.1(c) says UM/UIM coverage "shall not be increased by stacking" the limits of multiple vehicles on one policy, or the limits of multiple policies. If more than one policy applies, recovery cannot exceed the higher of the limits, and the policies share it in proportion. A second car does not double your coverage.
Tell your insurer before you settle
This is where valid claims die. The at-fault driver's insurer offers its limit. You are tempted to take it and move on. Do not accept until your own carrier has been told.
The statute makes UIM coverage subject to policy terms on "unauthorized settlements" and subrogation, and the Supreme Court has enforced the point. In Ferrante v. New Jersey Manufacturers Insurance Group (N.J. Apr. 11, 2018), the driver sued the at-fault driver and never told his own carrier. He was never given a chance to step in. The Court held that because of the "complete absence of notice" over years of litigation, the carrier could refuse to pay UIM benefits.
The rule is simple:
- Give your carrier written notice when you file suit against the at-fault driver.
- Give written notice of every settlement offer before you accept it.
- Give notice of any arbitration, high-low agreement or trial date.
The carrier can then pay you the offered amount and take over your claim against the other driver, or let you settle. Either way, you keep your claim. That is why it matters who is handling this for you.
Check the pieces that change the claim
- Your lawsuit option. The statute ties the tort option you elected to non-economic loss in uninsured motorist claims. Ask how it applies to yours, and read our limited vs. unlimited guide.
- A business-owned car. If a company's policy covers the vehicle you were driving, an employee cannot receive less UM/UIM coverage than the named insured. Ask for the company's declarations page.
- Property damage. UM/UIM property damage carries a $25,000 aggregate limit on plans issued or renewed on or after January 1, 2023, with the first $500 excluded.
- Hit-and-run. A hit-and-run vehicle is treated as an uninsured vehicle, which makes this coverage the one that pays.
Changes are pending in Trenton, including a bill that would make UM/UIM compulsory. It has only been introduced. Plan around the law as it stands today.
At Starkman Firm you see the attorney, not a case manager. If an insurer has offered you its limit, call before you sign anything: Cherry Hill 856-424-7277 or Perth Amboy 732-324-2011. There is no fee unless we recover for you, and we work in English and Spanish.
This article is general information about New Jersey law, not legal advice, and reading it does not create an attorney-client relationship. Every case turns on its own facts and its own deadlines. Talk to a lawyer about yours.