What Every Vehicle Owner Needs To Know

With a significant improvement in the control of COVID-19 in New York and elsewhere, there’s an uptick in social activities and vehicular travel once again. I want to discuss an often overlooked, relatively inexpensive and vital coverage on your personal and or business vehicle: Supplementary Uninsured/Underinsured Motorists (SUM) coverage. 

SUM coverage protects you and other insured members of your vehicle in case you are involved in an accident with another motor vehicle whose owner or operator was at fault and had no insurance or was insured with relatively low liability limits for bodily injury. This coverage will protect the financial well-being of your family in the event you are seriously hurt in a collision with an uninsured or underinsured motor vehicle owner/operator. Look at the last item on the Declaration Page of your auto policy to see what SUM coverage you have.

         In New York State, the minimum liability insurance a vehicle must carry is $25,000 per person and $50,000 per accident (the larger number covers multiple injured persons). How do you know if you qualify for SUM coverage?  This can best be explained in the following example, which happens frequently in real life.  Suppose that while driving your family car and at a complete stop at a red light, you are rear-ended by a vehicle that is insured for the minimum $25,000.  Let us further assume that you sustain serious injuries that justify a recovery of $250,000. In order to be able to recover more than the minimum $25,000 of liability insurance from the negligent vehicle owner, your own vehicle’s insurance policy would have to provide the following:

1.    Liability coverage to protect you, if you were sued, in an amount greater than the $25,000 minimum, for example, $100,000/$300,000 or $250,000/$500,000; and

2.    SUM coverage in excess of $25,000 per person and $50,000 per occurrence.

Your insurance company must offer you the option of purchasing SUM coverage equal to your liability coverage.  The insurer must notify you of this option in writing when they issue your policy and at least once a year after that. In the example above, if the family vehicle was insured for $250,000 (to protect you if you were sued) and you purchased $250,000 in SUM coverage, the injured family member could recover a total of $250,00 for his or her serious injuries. First, they would have to recover the $25,000 minimum insurance from the negligent driver. Second, a claim would then be made directly against your own insurance company for SUM benefits. Even though your policy provided for $250,000 in SUM coverage, your insurer is entitled by law to receive a credit of $25,000 from the recovery received from the negligent driver. You would then receive from your own insurer the sum of $225,000 which would bring your total recovery to $250,000.

I hope you will take this into consideration to protect your health and financial well-being. Any questions? Please comment below or call my office. And most importantly, safe travels.