UNINSURED MOTORIST (“UM”) AND UNDERINSURED MOTORIST (“UIM”) COVERAGES IN GENERAL. 

If you were injured in a car accident in New Jersey or Pennsylvania and the other driver was uninsured or underinsured, you may be wondering how you will be compensated for your injuries, property damage, and/or any resulting losses. You may learn at the accident scene if the other driver does not have insurance, but you will most likely not know if they are underinsured until the amount of your damages comes into better focus. While, being involved in an accident with an UM or UIM can be an exasperating situation, it is not a hopeless one. 

UM coverage protects you if you are involved in an accident with a driver who does not have any insurance. UIM coverage, on the other hand, protects you if you are involved in an accident with a driver who has insurance, but not enough to cover the amount of your damages. 

UM coverage can provide compensation for medical expenses, lost wages, and other damages that you incur due to an accident (with an UM). The same types of damages can be paid for by UIM coverage, but it is only a factor if the other driver’s insurance is insufficient to cover the costs of your injuries. 

New Jersey Coverages.

In New Jersey, UM coverage is mandatory; UIM coverage is optional, but highly recommended. The law requires insurance companies to offer UIM coverage to drivers, and drivers must sign a form rejecting the coverage if they do not want it. If a driver chooses to purchase UIM coverage, the policy must provide coverage up to the limits of liability coverage for bodily injury or property damage in the policy. 

Concerning coverage, N.J.S.A. 17:28-1.1 states: 

b. Uninsured and underinsured motorist coverage shall be provided, as an option by an insurer to the named insured electing a standard automobile insurance policy, up to at least the following limits: $250,000.00 each person and $500,000.00 each accident for bodily injury; $100,000.00 each accident for property damage or $500,000.00 single limit, subject to an exclusion of the first $500.00 of such damage to property for each accident, except that the limits for uninsured and underinsured motorist coverage shall not exceed the insured’s motor vehicle liability policy limits for bodily injury and property damage, respectively.; 

Under New Jersey law, an injured party who has purchased UM coverage is entitled to recover damages from their own insurance policy if they are involved in an accident with an uninsured or hit-and-run driver. However, the amount of recovery is subject to the “collateral source rule,” which provides that the injured party’s recovery from their own insurance policy must be reduced by any collateral or other sources of compensation. 

The purpose of the collateral source rule is to prevent injured parties from receiving a windfall by collecting from multiple sources for the same damages. It also helps to prevent double recovery, where the injured party is compensated more than the actual amount of damages they suffered. 

Pennsylvania Coverages. 

In Pennsylvania, the law requires insurance companies to offer UM and UIM Coverage to drivers, but drivers are allowed to reject the coverage so long as it is done in writing. If a driver chooses to purchase UM or UIM coverage, the policy must provide coverage up to the limits of liability coverage for bodily injury or property damage in the policy. Drivers can also choose between “limited” or “full” UIM coverage.¹ Limited coverage only applies if the other driver does not have any insurance, while full coverage applies if the other driver has insurance, but it is not enough to cover the damages. 

In Pennsylvania, the minimum coverage limits for UM and UIM Coverage are set forth in 75 Pa. C.S.A. §1731: 

(b) Minimum amounts. — The minimum limits of coverage for uninsured motorist and underinsured motorist coverages shall be $15,000/$30,000 for bodily injury, subject to these limits for each person injured in any one accident and $5,000 for property damage. 

These are the minimum coverage limits required by law, but drivers can choose to purchase higher limits if they wish. When you purchase UM or UIM Coverage, you can select the coverage limits that best meet your needs and budget. 

Benefits of UM and UIM Coverage. 

Unless there is a significant financial hardship, the benefits of UM and UIM coverages in both states far outweigh any detriments, especially if you find yourself needing to avail yourself of the coverages. Both UM and UIM coverage can provide additional benefits, including: 

1. Peace of mind:  Knowing that you have additional coverage can help alleviate some of the stress and financial burden of being involved in an accident.
2. Protection for passengers:  Your UM and UIM coverage can also cover your passengers if they are injured in an accident with an UM or UIM.
3. Flexibility:  UM and UIM coverage can provide more flexibility than relying solely on the other driver’s insurance coverage, which may have limits or exclusions that prevent you from receiving the full amount of compensation you deserve. 

¹ “Limited” coverage only applies if the other driver involved in the accident does not have any insurance coverage. If you have limited coverage and the other driver does have insurance coverage, their insurance will be responsible for paying for any damages up to the policy limits. However, if the other driver’s insurance is not enough to cover all the damages, your limited UIM would cover the difference, up to the policy limits. 

“Full” coverage applies if the other driver has insurance coverage, but it is not enough to cover the damages resulting from the accident. If you have full coverage, your UIM coverage would cover the difference between the other driver’s policy limits and the actual cost of the damages, up to the policy limits.

Overall, the primary benefit of UIM and UM coverage is to ensure that you are not left with significant out-of-pocket expenses if you are involved in an accident with a driver who does not have adequate or any insurance coverage. 

Conclusion 

In summary, in New Jersey UM coverage is mandatory and UIM coverage is optional; in Pennsylvania, both UM and UIM coverages are optional. The decisions on these coverages may not seem significant when you renew your automobile insurance policy(ies), but they are. If you are involved in an accident with an uninsured or underinsured driver, your choices concerning UM and UIM coverage can become critical. If you are not sure what to do, consult with a qualified insurance professional or your attorney to ensure that you have adequate protection in the event of an accident with a UM or UIM. 

Retain Experienced Accident Attorneys. 

If you have been involved in an accident with an uninsured or underinsured driver, contact the team at Petrillo & Goldberg Law without delay. We can guide you through the insurance and recovery issues and the differences between Pennsylvania and New Jersey. We have offices conveniently located in Philadelphia and South Jersey and are available to discuss the details of your case and your rights. 

THE DRIVER THAT HIT ME IS UNINSURED OR UNDERINSURED. (PART B) 

THE DIFFERENCES BETWEEN NEW JERSEY AND PENNSYLVANIA – STACKING POLICIES AND THE “HOST” VEHICLE RULE. 

If you have been in an accident with an uninsured motorist (“UM”) or underinsured motorist (“UIM”), you will be glad that you have UM and UIM coverages. Aside from the mandatory or optional nature of the UM and UIM coverages set forth in our previous article  – in New Jersey, UM coverage is mandatory and UIM coverage is optional; in Pennsylvania both are optional — there are several significant differences between the states that are important to understand as you move through the post-accident process:

• Stacking policies;
• “Host” Vehicle Rule
• Collateral Source Rule; and
• “Step-Down” Rule.

In this article, the focus will be on stacking policies and the “host” vehicle rules. 

Each of these is an important aspect of the UM and UIM coverage issues. These are complex concepts and, if you have questions about your coverage in New Jersey or Pennsylvania, you should speak with an insurance professional or a knowledgeable attorney. 

STACKING POLICIES. 

Stacking of insurance coverage refers to the practice of combining multiple insurance policies or coverage limits to increase the amount of coverage available for a particular claim. This can be done in situations where a person is involved in an accident with an underinsured or uninsured driver and the damages exceed the limits of the driver’s insurance policy. In these cases, the injured person may be able to “stack” their own insurance policies to increase the amount of available coverage. 

New Jersey Stacking. 

In New Jersey, the ability to stack insurance coverages is generally very limited. Stacking of policies is covered by NJSA 17:28-1.1, which states: 

c. Uninsured and underinsured motorist coverage provided for in this section shall not be increased by stacking the limits of coverage of multiple motor vehicles covered under the same policy of insurance nor shall these coverages be increased by stacking the limits of coverage of multiple policies available to the insured. If the insured had UM coverage available under more than one policy, any recovery shall not exceed the higher of the applicable limits of the respective coverages and the recovery shall be prorated between the applicable coverages as the limits of each coverage bear to the total of the limits. 

Under New Jersey law, the injured person’s own insurance coverage is reduced by the amount of coverage provided by the at-fault driver’s insurance policy, and they are generally not allowed to “stack” their own insurance policies to increase the amount of coverage available. For example, if the at-fault driver has $25,000 in liability insurance coverage, and you have a separate insurance policy with $50,000 in UIM Coverage, you would only be able to collect up to the $25,000 provided by the at-fault driver’s policy and cannot “stack” your own insurance policies to increase the amount of coverage. There are some exceptions to this rule, such as when the at-fault driver is a commercial or government entity, or when the injured person is a passenger in a commercial vehicle. 

Pennsylvania Stacking. 

In Pennsylvania, stacking of insurance coverages is generally permitted. Pursuant to 75 Pa. C.S.A. §1738, which states: 

(a). General rule. — If the limits of available liability insurance coverage are insufficient to compensate any person entitled to recover damages, in the aggregate, the underinsured motorist coverage applicable to the vehicles involved in the accident shall be stacked to provide coverage in addition to the available liability insurance coverage, up to the limits of the underinsured motorist coverage available for each vehicle involved in the accident. 

(b) Multiple vehicles. — The limits of underinsured motorist coverage available under each policy for which a premium has been paid shall be added together to determine the total limits of underinsured motorist coverage available to an injured person, subject to the terms of each policy and the limits of coverage available for each vehicle involved in the accident.”

Under Pennsylvania law, if you are injured in an accident with an underinsured or uninsured driver and have multiple insurance policies that provide coverage, you can “stack” the policies to increase the amount of coverage available. For example, you are involved in a car accident and the at-fault driver has only $25,000 in liability insurance coverage, but your medical bills and other damages amount to $75,000. However, you have two separate insurance policies that each provide $50,000 in UIM Coverage. In this case, you may be able to stack your insurance coverages to increase the amount of available coverage. 

First, you would make a claim against the at-fault driver’s insurance policy and receive the maximum amount of coverage available, which is $25,000. You would then make a claim against one of your insurance policies and receive an additional $50,000 in coverage, for a total of $75,000. However, because you have a second insurance policy that also provides $50,000 in UIM coverage, you may be able to stack the policies to receive an additional $50,000 in coverage, bringing your total available coverage to $125,000. In this example, stacking of insurance coverages allows you to recover the full amount of your damages, even though the at-fault driver’s insurance policy only provided a fraction of the coverage needed.

However, in Pennsylvania, there is also a “household exclusion,” which limits the ability to stack insurance coverages for members of the same household. Under this rule, if you are injured in an accident while occupying a vehicle owned by a family member who has a separate insurance policy, you may not be able to stack your own insurance policies to increase the amount of coverage available. This is because you, the injured person, is considered to be covered by the family member’s policy, and the household exclusion prevents you from “double dipping” by also collecting from your own policy. 

In Pennsylvania, stacking insurance policies is allowed by default, but policyholders can choose to waive that right and, if they do, it must be done in writing. 

It is important to note that while stacking can provide additional coverage, it may also increase your insurance premiums. Additionally, the specific rules for stacking can vary depending on the insurance company and policy language. Therefore, it is important to review your insurance policy carefully and consult with your insurance agent or attorney to understand the stacking rules and options available to you. 

“HOST” VEHICLE CONCEPT. 

Depending on the facts and circumstances of an accident, the concept of a “host” vehicle may come into play. While this is a fairly technical rule, it is, nonetheless, important and can play a crucial role in how an UM or UIM accident case plays out.

New Jersey’s “Host” Vehicle Rule. 

In New Jersey the “host” vehicle is the vehicle that is insured under the insurance policy that provides UM or UIM coverage. This means that the host vehicle is the vehicle to which the UM or UIM coverage applies.

For example, if you are driving your own car and are involved in an accident with an UM, the UM coverage on your car insurance policy would apply because your car is the “host” vehicle. However, if you are a passenger in someone else’s car when the accident occurs, the UM coverage on the driver’s insurance policy would apply because the driver’s car is the “host” vehicle. 

Pennsylvania Does Not Use the “Host” Vehicle Rule. 

Pennsylvania does not have a “host” vehicle concept when it comes to UM or UIM coverage. 

In Pennsylvania, UM or UIM coverage applies to the person who is named in the insurance policy, rather than to a particular vehicle. This means that if you are covered under an insurance policy that provides UM or UIM coverage, you would be covered regardless of whether you are driving your own car or someone else’s car when an accident occurs. 

However, it’s important to note that the availability and amount of UM or UIM coverage will depend on the specific insurance policy purchased by the individual or the owner of the vehicle. Additionally, as noted, Pennsylvania does allow for stacking of UM or UIM coverages in certain circumstances, which can increase the amount of available coverage. 

Conclusion 

The differences between UM and UIM coverage cases can be significant depending on whether you are insured in New Jersey or Pennsylvania. An experienced attorney can provide guidance on how the rules may apply in a particular case. 

Retain Experienced Accident Attorneys. 

If you have been involved in an accident with an uninsured or underinsured driver, contact the team at Petrillo & Goldberg Law without delay. We can guide you through the insurance and recovery issues and the differences between Pennsylvania and New Jersey. We have offices conveniently located in Philadelphia and South Jersey and are available to discuss the details of your case and your rights. 

THE DRIVER THAT HIT ME IS UNINSURED OR UNDERINSURED. (PART C) 

THE DIFFERENCES BETWEEN NEW JERSEY AND PENNSYLVANIA – COLLATERAL SOURCE RULES AND STEP-DOWN RULES. 

As discussed in the previous article, there are significant differences between the laws in New Jersey and Pennsylvania when it comes to accidents with uninsured motorists (“UM”) and underinsured motorists (“UIM”). Having an attorney that understands the differences between each state’s laws and procedures can be critical to the outcome of your case. 

COLLATERAL SOURCE RULES. 

Both New Jersey and Pennsylvania, have something called “the collateral source rule.” Essentially, while there are differences in how the rule is applied in each state, the purpose is the same: (1) preventing injured parties from receiving a windfall by collecting from multiple sources for the same damages and (2) preventing a double recovery, where the injured party is compensated more than the actual amount of damages they suffered. 

The New Jersey Collateral Source Rule. 

Under New Jersey law, an injured party who has purchased UM coverage is entitled to recover damages from their own insurance policy if they are involved in an accident with an uninsured or hit-and-run driver. However, the amount of recovery is subject to the collateral source rule, which provides that the injured party’s recovery from their own insurance policy must be reduced by any collateral sources of compensation. 

For example, if you have $50,000 in UM coverage and incur $100,000 in damages as a result of an accident with a UM, but also receive $25,000 from a settlement with the at-fault driver, their UM carrier is only responsible for paying the remaining $25,000 in damages. 

This means that an injured party’s recovery from the at-fault party’s insurance coverage will be reduced by the amount of compensation received from other sources, such as health insurance or workers’ compensation benefits. It prevents an injured party from recovering damages from the at-fault party’s insurance coverage for injuries for which they have already been compensated (by collateral sources).

The Pennsylvania Collateral Source Rule. 

Pennsylvania’s rule is a little bit different. It provides that an injured party who has been compensated for damages from sources other than the at-fault party’s insurance coverage (like workers’ compensation or health insurance benefits), cannot be denied recovery of damages from the at-fault party’s insurance coverage on the basis that they have already received compensation from another source.

In other words, the at-fault party cannot reduce their liability for damages simply because the injured party has received compensation from another source. The injured party is entitled to recover the full amount of damages from the at-fault party’s insurance coverage, even if they have already received compensation from other sources. 

The injured party may be required to reimburse the collateral source that provided the compensation, such as a health insurer, for the amount of compensation received. This is known as subrogation, which means that the injured party may be required to reimburse the collateral source that provided the compensation, such as a health insurer, for the amount of compensation received.

It is important to note that the collateral source rule in Pennsylvania may be subject to certain limitations, such as the “made-whole doctrine,” which requires that the injured party be fully compensated for their damages before any subrogation claims can be enforced. 

“STEP-DOWN” RULE. 

A “step-down” provision in auto insurance law refers to a rule that limits the amount of UM or UIM coverage that an injured party can recover from their own insurance policy if the at-fault driver has liability insurance with lower coverage limits than the injured party’s policy. 

New Jersey’s Step-Down Rule. 

Under the step-down rule, if an injured party has purchased UM or UIM coverage with higher limits than the at-fault driver’s liability insurance policy, their own coverage “steps down” to match the at-fault driver’s coverage limits. For example, if the at-fault driver has liability insurance coverage of $25,000 per person and you, the injured party, have UM or UIM coverage of $100,000 per person, your own coverage would be reduced to match the at-fault driver’s coverage limits of $25,000 per person. 

The purpose of the step-down provision is to prevent injured parties from collecting more than the at-fault driver’s policy limits from their own insurance policies. In this way, the injured party’s insurance policy is designed to supplement the at-fault driver’s policy rather than replace it. 

There are some exceptions to the step-down rule. For example, the rule does not apply when the at-fault driver is uninsured or when the injured party is a passenger in a commercial vehicle. 

You may be wondering why there is a need for the step-down rule when there is a collateral source rule. They are, despite appearances, different. 

The collateral source rule provides that an injured party’s recovery from the at-fault party’s insurance coverage must be reduced by the amount of compensation received from collateral sources, such as health insurance or workers’ compensation benefits. This means that an injured party cannot recover damages from the at-fault party’s insurance coverage for damages that have already been compensated by collateral sources. 

On the other hand, the step-down rule applies specifically to UM and UIM coverage in New Jersey. The step-down rule provides that if an injured party has purchased UM or UIM coverage with higher limits than the at-fault driver’s liability insurance policy, their own coverage “steps down” to match the at-fault driver’s coverage limits. In other words, the injured party cannot recover more than the at-fault driver’s coverage limits from their own insurance policy. 

So, while both rules affect the amount of damages that an injured party can recover in a personal injury lawsuit, the collateral source rule applies to all types of damages, while the step-down rule specifically applies to UM and UIM coverage.

In practical terms, this means that an injured party may receive less compensation under their own UM/UIM coverage than they would under the at-fault driver’s liability insurance coverage. 

Pennsylvania and the Step-Down Rule. 

There is no step-down rule in Pennsylvania for UM or UIM coverage. 

In Pennsylvania, an injured party who has purchased uninsured/underinsured motorist coverage is entitled to recover up to the policy limits of their own insurance policy, regardless of the amount of liability insurance coverage carried by the at-fault driver. 

This means that if an injured party has uninsured/underinsured motorist coverage with higher limits than the at-fault driver’s liability policy, they can still recover up to the full amount of their own policy limits. The at-fault driver’s insurance coverage does not limit the amount of recovery available from the injured party’s own insurance policy. 

However, it is important to note that the amount of available coverage may be subject to certain limitations, such as the household exclusion or the terms and conditions of the insurance policy. Additionally, UM and UIM coverage is not mandatory in Pennsylvania, so the availability of this coverage will depend on the specific insurance policy purchased by the injured party. 

Conclusion 

The differences between UM and UIM coverage cases can be significant depending on whether you are insured in New Jersey or Pennsylvania and the results achieved vary as well. An experienced attorney can provide guidance on how the rules may apply in a particular case. 

Retain Experienced Accident Attorneys. 

If you have been involved in an accident with an uninsured or underinsured driver, contact the team at Petrillo & Goldberg Law without delay. We can guide you through the insurance and recovery issues and the differences between Pennsylvania and New Jersey. We have offices conveniently located in Philadelphia and South Jersey and are available to discuss the details of your case and your rights.