“PLENTY” OF INSURANCE COVERAGE IS NOT ALWAYS ADEQUATE
When people shop for automobile insurance, they frequently evaluate how good their insurance coverage is by looking exclusively at the liability limit. While the liability limit is an important component of insurance coverage, evaluating the adequacy of a car insurance policy should not end there.
The liability portion of your insurance coverage exists to protect you from claims made by others arising out of your ownership or operation of a motor vehicle. The liability limits shown on the Declarations Page of your insurance policy is the maximum amount which your insurance company will pay to someone else (under that policy) for an auto accident. The liability limit is what people typical look at in assessing how “good” their policy is. However, you should also look at the other coverages on the Declarations Page because the liability limit protects you from claims made by others, but it does not protect you if you are involved in an accident with another person who is inadequately insured.
In those instances in which you sustain a serious personal injury in a motor vehicle accident, you are legally entitled to pursue a claim against any person that is responsible for causing the accident. The insurance which is available to compensate you for that accident is dependent upon the insurance in existence at the moment of the accident. Frequently, upon counseling clients after an accident has already happened, they learn that their “good insurance policy” is actually inadequate. For that accident, it is already too late.
The law allows others to purchase merely minimum insurance policies. However, fortunately, the law also provides that you can take action to protect yourself from the minimally insured person; provided you acted before an accident occurs. Unfortunately, frequently when a client finds herself in this position, she has already been involved in an accident and is in the process of consulting with an attorney to inquire about her legal rights.
The following examples highlight potential pitfalls:
EXAMPLE 1: You are involved in a motor vehicle accident and sustain serious personal injuries. The responsible party has no insurance. What are your options?
A) You can sue the responsible party, get a judgment for a monetary sum, and try to collect the money from the deadbeat.
B) You can file a claim with your own insurance company upon a showing that the responsible party is not insured. But beware: If you did not purchase more than the minimally required amount that your insurance company is obligated to provide you, your recovery will be limited to the minimum amount.
SUGGESTION: Before the accident occurs, make sure you have paid the relatively minimal additional premium to obtain a higher UM policy limit.
EXAMPLE 2: You are involved in a motor vehicle accident and sustain serious personal injuries. The responsible party has minimal insurance. What are your options?
A) You can sue the responsible party, get a judgment for a monetary sum, and try to collect the amount above the wrongdoer’s insurance policy limit from the wrongdoer.
B) You can file a claim with your own insurance company upon a showing that the responsible party is not insured. But beware: If you did not purchase more than the minimally required amount that your insurance company is obligated to provide you, your recovery will not be permitted or will be limited. Since the responsible person has insurance (but no enough insurance to adequately compensate you) you can collect a settlement or court judgment against the responsible person up to their full insurance policy limit and thereafter file a claim to obtain the balance of your compensation from your own insurance company.
SUGGESTION: Before the accident occurs, make sure you have paid the relatively minimal additional premium to obtain a higher UM policy limit. You can avoid the above scenarios; but you must act before being involved in the accident.
In New York, your auto insurance company must provide you with uninsured (UM) motorist protection and underinsured (UIM) motorist protection. Note that in some car insurance policies, those provisions of the policy are referred to as “SUM coverages.” Regardless of the name, those coverages exist to protect you from a situation in which you sustain a serious personal injury and the responsible party either does not have insurance (ie, is uninsured) or does not have enough insurance to adequately compensate you for your loss (ie, underinsured). While there are minimum amounts of each of these coverages which must be provided by your vehicle insurance company, many people do not know that they are permitted to increase their UM/UIM/SUM coverage to a higher amount. The premium associated with increasing the amount of coverage is relatively minimal but the potential benefit is substantial.
Unfortunately, in the metropolitan area there are too many people owning or operating motor vehicles with inadequate insurance. Thus purchasing the appropriate UM, UIM or SUM coverage is an important provision of your own insurance policy.
Please note that even if you have adequate UM, UIM or SUM coverage and are involved in a motor vehicle accident in which you sustain serious personal injuries, there are significant time constraints within the insurance policy requiring that you act promptly. Since every policy is unique, it is suggested that you promptly consult with an attorney if involved in a motor vehicle accident in order to be fully apprised of your legal rights before they are forfeited by your failure to timely act.