The Kiley Law Firm Blog

One of the least understood and, therefore, overlooked options for automobile insurance is the one that provides uninsured and underinsured liability coverage.  It is listed on the policy declarations page under the heading “UM/SUM.”

Uninsured Motorist coverage “UM” is mandated by New York State.  It protects the driver and passengers of a vehicle who are injured by uninsured negligent drivers.  Each car insured in New York State must have, at minimum, the basic “$25K/$50K” coverage.  That is, a maximum of $25,000.00 per injured person and a maximum of $50,000.00 to be divided among all injured persons.

Confused?  Here’s how it works.  If a thrice-convicted drunk driver forgets to pay his auto insurance premium and kills a forty-year-old father of four by rear ending him into a concrete divider, the man’s wife can recover $25,000.00 from his own insurance company under his basic UM coverage.

However, if one of his children is also in the car suffers a head injury and is permanently brain damaged, he too can recover $25,000.00.

But if a second child is in the backseat and sustains bilateral comminuted “tib/fib” fractures, his wife and the two children will split $50,000.00.  And not a dime more.

“Wow,” you might wonder, “how can this family be financially protected from such an unfathomable tragedy?”  That’s where “Supplemental Underinsured Motorist” coverage helps.  If Dad has a $300K/$500K liability policy with DoRight Insurance Company, he can purchase SUM coverage up to the same amount as his liability coverage.  Then if the driver has no insurance or a policy with lower liability coverage, his own insurance company will indemnify him for the difference between the two policies.  So, if Dad was alone in the car, his wife could recover $275,000.00 from DoRight.  And if two or more people were in the vehicle, they will split $450,000.00 between them.

Purchasing UM/SUM coverage for the same limits as your liability insurance makes sense.  It’s the only way to protect yourself against uninsured and underinsured drivers.  And who wouldn’t want to protect himself and his loved ones as much as he protects a stranger?  Besides UM/SUM coverage is cheaper than a ten-dollar whore at a French seaport and UM/SUM claims are not “charged against” the owner’s policy.

So . . . why doesn’t every owner buy the maximum coverage?  There are several reasons:

(1)        IGNORANCE.  Many people just don’t understand how automobile insurance works.

(2)        STUPIDITY.  Some drivers ignore the advice of well-informed and well-intentioned insurance brokers (most are in this category) who recommend that they purchase the maximum UM/SUM.

(3)        AVARICE.  A few sleazy insurance brokers know that there is little profit to be made selling UM/SUM coverage and try to lure customers by selling policies with the cheapest premiums.

(4)        SLOTH.  A few other brokers are too lazy to bother scrutinizing the policy or explaining to the customer how SUM works and why it is so important.

Don’t fall victim to one of these sins.  Examine your insurance policy.  If you have the maximum UM/SUM coverage, pat yourself on the back, praise your insurance broker or thank your lucky stars. If you don’t have the coverage, wake up, get smart and find a good broker.

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.  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.