New Jersey's top court ruled that commercial auto policies can cap underinsured motorist coverage far below their liability limits.
In a unanimous decision on August 6, 2026, the Supreme Court of New Jersey answered two questions referred by the federal Third Circuit about underinsured motorist (UIM) coverage in commercial auto policies. UIM coverage pays out when an at-fault driver's insurance is too small to cover the victim's losses.
The case began with a 2022 crash. An employee was injured while driving a vehicle owned by his employer, TJX Companies. The vehicle was insured by Zurich American Insurance Company (Zurich) under a policy carrying $2,000,000 in bodily injury liability. An endorsement - written by Zurich and accepted by TJX's representatives - limited UIM coverage to "$15,000 per person and $30,000 per accident."
The at-fault driver carried $100,000 in liability coverage, and his insurer paid that in a settlement. Because $100,000 exceeded Zurich's $15,000 UIM limit, Zurich said the other driver was not underinsured and denied the claim.
The employee sued, asking a court to rewrite the policy to provide $2,000,000 in UIM coverage, matching the bodily injury limit. He argued the $15,000 cap violated N.J.S.A. 17:28-1.1(f), which says employees must receive "the maximum . . . underinsured motorist coverage available under the policy." A federal district court sided with Zurich, and the employee appealed.
The state Supreme Court read the law narrowly. It held that "maximum . . . available under the policy" means the UIM limit the business actually selected for the named insured, not the higher liability limit. If a company buys a lower UIM figure that clears the state's minimums, its employees receive that same figure.
On the second question, the court held that an endorsement setting UIM below the liability limit does not violate the statute or public policy, provided the UIM meets the law's requirements and named insureds and employees face the same limits.
The ruling answers a question carriers had been watching. UIM endorsements priced below a policy's liability ceiling remain enforceable in New Jersey, as long as they treat named insureds and employees the same. The court noted lawmakers could amend the statute if they choose.
