You did everything right. Someone ran a light on Route 9, put you in the hospital, and their carrier accepted liability. Then the adjuster tells you the number: the at-fault driver carried the state minimum, and that is the whole pot. Your surgery bill alone is bigger than their policy.
That is an underinsured motorist case, and in New Jersey it runs on rules that punish people who do not follow them exactly. Sign the wrong paper at the wrong time and you can wipe out a claim worth far more than the check you just cashed.
What “underinsured” actually means in New Jersey
Uninsured motorist (UM) coverage applies when the other driver had no insurance at all, or fled and was never identified. Underinsured motorist (UIM) coverage applies when the other driver had insurance — it just was not enough.
Here is the part almost everyone gets wrong. Under N.J.S.A. 17:28-1.1(e), a vehicle is only “underinsured” if the at-fault driver’s liability limit is less than your own UIM limit. You compare limit to limit — not limit to how badly you were hurt. If you carry the same UIM limit the other driver carried in liability coverage, there is no UIM claim to make, no matter how catastrophic your injuries are.
New Jersey’s minimum liability limits stepped up on January 1, 2026 to $35,000 per person / $70,000 per accident for bodily injury and $25,000 for property damage, applying to standard policies issued or renewed on or after that date (the basic policy is a separate animal). UM/UIM limits track those minimums. That increase helps — but a serious injury case burns through $35,000 before the case is even worked up.
You have to exhaust the other driver’s policy first
You cannot skip ahead to your own carrier. New Jersey requires you to recover the at-fault driver’s full liability limit — by settlement or by judgment — before you can pursue your contractual UIM benefits. That principle comes out of Longworth v. Van Houten, 223 N.J. Super. 174 (App. Div. 1988), the case that governs how these claims are sequenced.
And your UIM carrier gets a credit for the at-fault driver’s entire liability limit — not for whatever you happened to settle for. Settle the liability claim for less than the policy limit and you have quietly donated the difference. It comes out of your pocket, not the insurance company’s.
The Longworth notice: the step that saves or kills the case
When the at-fault carrier offers its limit, you do not just take it. Your UIM carrier has subrogation rights — the right to go after the at-fault driver itself — and a signed release destroys those rights. So the law built in a step:
- You notify your own UIM carrier, in writing, of the tentative settlement and its terms before you sign anything.
- The carrier gets a short window (commonly 30 days under the policy) to respond.
- It can consent to the settlement and preserve your UIM claim, or it can protect its subrogation rights by advancing you the settlement amount itself and stepping into your shoes against the at-fault driver.
- If it does nothing, it has generally waived the objection — but that is not a bet worth making on a serious case.
Related duties follow the same logic. If you file suit against the at-fault driver, your UIM carrier needs notice of that lawsuit so it can protect its interests. New Jersey courts have found that hiding the litigation from the UIM carrier can cost the insured the claim outright.
The other traps in a UIM claim
- You are now adverse to your own insurance company. The friendly carrier that paid your PIP medical benefits becomes the defendant on the UIM side. It will take your statement, demand an exam, and value your case like any defense carrier.
- Most UIM disputes go to arbitration, not a jury, because that is what the policy says. Different forum, different strategy, same need for real proof of injury.
- The verbal threshold still applies. If you chose the limitation-on-lawsuit option, you still have to clear it in a UIM claim.
- Stacking multiple policies is limited. New Jersey does not let you pile UIM coverages from several policies on top of each other the way some states do. You generally get the single highest applicable limit.
- Time does not stop. The claim against the at-fault driver is still governed by its own deadline, and blowing it takes the UIM claim down with it.
What to do right now
Find your declarations page and look for the UM/UIM line. That number, not your medical bills, is what caps this case. Then do not sign a release, do not accept a “final” limits offer, and do not give your own carrier a recorded statement about your injuries until someone has walked the Longworth steps for you in the right order. The same discipline applies when the at-fault driver turns out to have no coverage at all or was carrying a dollar-a-day policy.
These are the cases where the difference between a competent handling and a careless one is measured in six figures. If someone with a minimum policy hurt you, we will read your coverage, put the carriers on notice correctly, and go get the rest of what the case is worth. Learn more about how we handle New Jersey personal injury claims.
Call Goldman Law Firm at 908-692-7745 for a free consultation. Bring your declarations page — the first five minutes of that call will tell you whether you have a UIM claim at all.