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New York’s Recent Supplementary Uninsured/Underinsured Motorist (SUM) Insurance Reform Closes a Subtle Loophole

New York is a no-fault auto insurance state, meaning that your Personal Injury Protection (PIP) insurance generally pays your benefits up to the policy limits even if the other party was at fault. New York no-fault auto insurance covers medical expenses, lost earnings, death benefits, and certain incidental expenses arising from a traffic accident.

New York state’s minimum auto insurance requirements are:

  • $25,000 per person/$50,000 per accident bodily injury coverage
  • $10,000 property damage coverage
  • $25,000 per person/$50,000 per accident uninsured/underinsured motorist (SUM) coverage
  • $50,000 in Personal Injury Protection (PIP) coverage

If You Are Injured by an Uninsured Motorist

In New York, your $50,000 in Personal Injury Protection (PIP) insurance can be added to your $25,000 per person Supplementary Uninsured/underinsured Motorist (SUM) coverage, giving you $75,000 in protection even if you are injured by an uninsured motorist. Many New York motorists are satisfied with this much coverage.

If You Are Injured by an Underinsured Motorist

If you are minimally covered and you are seriously injured by an underinsured motorist who carries the minimum liability insurance coverage of $25,000 per person, you might assume that your total available coverage is $100,000 ($50,000 PIP insurance, $25,000 SUM coverage and $25,000 from the other driver’s bodily injury liability insurance policy). Unfortunately, this is not the case.

The Devil’s in the Fine Print

Many motorists fail to read the fine print in their insurance policies and end up with unjustifiably optimistic assumptions about their insurance coverage. In the foregoing example (you are seriously injured by an underinsured motorist), you will not end up with $100,000 in coverage – you will end up with $75,000.

The reason is that underinsured motorist coverage only applies to the excess of your SUM coverage over the other driver’s liability coverage. In other words, you don’t add your $25,000 in SUM insurance to the offending driver’s $25,000 liability insurance. Instead, you subtract your coverage from his ($25,000 – $25,000 = zero) and add that to the $75,000 calculated above.

Filing a SUM Insurance Claim

To qualify for a SUM insurance payout, you must take the following steps:

  • Notify your insurance carrier in writing of the accident and the injuries you suffered. You need to issue this notice promptly. Consult with your lawyer on exactly how much information to divulge.
  • You must obtain a “policy limit offer” from the liability insurance carrier of the underinsured motorist who injured you. To do this, you will need to establish that the underinsured motorist was negligent. Establishing negligence is likely to require investigation, evidence collection, and negotiation.Of course, even this document will not help you with your SUM insurance claim if the underinsured motorist’s liability insurance policy limits are as high as (or higher than) your own SUM insurance coverage.
  • You must prove to your SUM insurance carrier that you qualify as an “insured.” This means you must be either:
    1. the policy holder;
    2. the policy holder’s spouse;
    3. a member of the policy holder’s household;
    4. an occupant of an insured vehicle; or
    5. an occupant of a vehicle operated by the policyholder or the policyholder’s spouse.

    Check your policy for details.

  • You must prove that your injury was caused by the accident. Don’t grant an insurance company full access to your entire medical history – they will examine it with a microscope looking for an excuse to deny your claim.

It Gets Worse (At Least It Did before the Recent Reforms)

Many New York motorists purchase far more than the legal minimum in case they suffer a serious injury that their PIP and SUM insurance together cannot cover. A motorist, for example, might purchase $400,000 in bodily injury coverage without reading the fine print in the policy. Unfortunately, your bodily injury policy only applies to injuries you cause to others, not your own injuries.

Until recently, even if you upgraded your auto insurance by upping your bodily injury policy to $400,000, your SUM coverage would still be only $25,000 unless you specifically requested a SUM policy upgrade as well. This could leave a gaping hole in your insurance coverage that you might not become aware of until you get seriously injured by another driver.

The New Reform

Under the new Driver and Family Protection Act, upgrading your liability insurance will result in an automatic upgrade of your SUM insurance to the same level. If you upgrade your liability insurance coverage to $400,000, for example, your SUM insurance will automatically increase to $400,000 as well (unless you specifically decline the upgrade in writing).

If you are injured by a minimally insured driver with this kind of coverage, your coverage will be equal to your PIP insurance plus $375,000 ($375,000 = your $400,000 SUM coverage minus the other driver’s $25,000 in bodily injury liability insurance). This is a great improvement over the prior coverage which was your PIP insurance plus zero ($25,000 minus $25,000). Obviously, this could make a huge difference in your life.

The New Law Doesn’t Automatically Apply to Your Existing Policy

You may have purchased your insurance policy before the new SUM law went into effect. If you did, you should check the fine print concerning your current SUM coverage, and upgrade it if you find it to be insufficient. Don’t wait until an accident occurs to make a change – by then it will be too late.

Contact Us Immediately

E. Stewart Jones Hacker Murphy wasn’t opened yesterday like so many personal injury law firms these days. We have been around for more than a century, and we have been named a top local law firm by U.S. News every year since 2011.

We serve clients from Albany, the Capital Region, upstate New York and beyond. If you are a car accident victim, or if you simply have questions about your coverage, contact us today to schedule a free case consultation.

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