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Why do so many drivers fail to get SUM coverage on their auto policies?

January 10th, 2011 Comments off

It happens oh so frequently.  I meet a recent accident victim for a consultation in my office.  They’ve been rear-ended or struck by some driver blowing a stop sign and they’ve sustained a fractured leg or arm or some other serious injury.  They need surgery and will be out of work for months.  At first glance they have a great case right?  Clear liability, serious injury, economic loss.  Hold on.  The driver and owner of the other vehicle are insured with the minimum liability policy required by law- $25,000. per claimant/$50,000 per claim.  I hope I have SUM coverage!Or, worse yet, they have no inusrance.  As is so often the case, the “case” is only as good as your ability to collect.   I then ask the question, ” Do you have SUM coverage?”  The usual response is, “What is SUM coverage?”

Dangerous drivers are one of the greatest hazards on the roads today. Dangerous drivers with “minimum limit” insurance policies are an even greater hazard.  You can’t always protect yourself from the dangerous driver, but you can protect yourself from his/her minimum liability coverage.

The minimum liability coverage required by the State of New York is “$25,000/$50,000”.  This means $25,000 coverage per person and a maximum of $50,000 per accident.  So, if you are injured because of the negligence of a driver holding these minimum limits, then the maximum amount which his/her insurance company is required to pay to you as a result of its insured’s negligence is $25,000.  If more than one person was also injured with you in that accident, the insurance company’s maximum exposure would be $50,000 to all injured parties.  Now consider the likelihood of being reimbursed for your losses if four or five persons sustained serious injuries in that same accident.  No matter how many persons are injured – and no matter how badly they are injured – the insurance company cannot be required to pay more than a total of $50,000 to all of the injured parties.

Certainly, you do not have to settle for the minimum insurance limits.  You can always proceed to trial and take your chances against the driver who was responsible for your injuries.  However, many drivers who carry minimum limit policies have no assets to lose and are virtually “judgment proof”.

The foregoing scenario is hypothetical- but hypothetical all too frequently becomes reality and we have frequently represented clients who had no hope of appropriate compensation because they were injured by underinsured drivers.  You can, however, protect yourself and the members of your household from underinsured drivers by obtaining supplementary underinsured and uninsured motorist coverage (commonly referred to as ”SUM”).  SUM coverage is a hedge against the driver who is uninsured or who has low coverage limits.  Here’s how it works: For an additional premium (in most cases not more than a few dollars) you can purchase SUM coverage up to the limits of your liability coverage.  In the event you are injured in an auto accident with an uninsured or minimally insured driver, a claim can be made against your own policy for the difference in coverage.  For instance, if the negligent driver has a minimum policy of $25,000/$50,000 and you have SUM coverage of $250,000/$500,000, you can pursue a claim against your own policy for additional damages up to $225,000 per person and $450,000 per accident. SUM claims are made through an arbitration proceeding and, as a result, are often concluded in months, rather than the years it can take to negotiate a personal injury case through the court system.

Despite the much needed benefits, this type of coverage is frequently overlooked.  So many people shop for car insurance by looking at the bottom line.  They get the cheapest policy they can buy and they fail to consider the real costs involved.  They do not take the time to consult with an insurance professional to consider their real needs and the suitability of the total policy.  There is more to car insurance then “collision or no collision”. Many of our clients have told us, after the fact, that they purchased the minimum liability no collision policy because “the car was old” and “they had no assets and didn’t fear a judgment”.  What these people failed to consider was the benefits of protecting themselves and their loved ones from the many uninsured and underinsured drivers on the road.

So how much insurance is adequate and how much will it cost?

You can only determine how much insurance is suitable for your needs by consulting with an insurance professional. Still, if you want to protect yourself you should carry a minimum of $100,000/$300,000 – that is $100,000 per person and $300,000 per occurrence. This way you can protect your personal assets in the event that you were negligent. In addition, you will afford yourself the opportunity to purchase SUM coverage of the same limits -so that if you are injured by an uninsured or underinsured driver you too will be protected.

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