There are different ways to view an auto insurance policy. For some people, it is peace of mind. For others, it is viewed as an irritating expense—a premium paid every month for a service you’ve never used. It is the latter attitude than can land people in hot water.
The temptation when shopping for an auto insurance policy may be to ask, “what is the minimum coverage required?” While that approach will keep you legally covered in the eyes of New York, it can leave you very vulnerable should your vehicle be involved in an accident. The reason I say “vehicle” here, is because one misnomer people have, is that only the driver of a car is responsible for an accident. That isn’t necessarily the case. If you loan your car to someone to drive, and they are in an accident, the ultimate responsibility/liability will come back to you.
Section 388 of the Vehicle and Traffic Law of New York State provides that the owner of a motor vehicle is responsible for the actions and conduct of any driver of that vehicle if it is being operated with the owner’s permission and consent.
That is just one example of where being underinsured can hurt you. We regularly work with clients who have been in a motor vehicle accident where one of the parties is underinsured. I can tell you from decades of experience, it isn’t a place you want to find yourself.
New York State law requires that motorists carry a minimum amount of liability insurance of $25,000 for bodily injury to one person, $50,000 for bodily injury to all persons, and $10,000 for property damage in any one accident. Mandatory “no-fault” coverage of $50,000 is also required.
That being said, it may be wise, for several reasons, to consider carrying higher limits on your insurance policy.
First, consider raising your liability levels as high as you can reasonably afford. If you are at fault in an accident and injure someone else or damage their property, you will be held liable for their entire claim. Drivers without enough liability coverage could be held responsible for a claim beyond their coverage, putting your personal assets at risk. Having the highest liability coverage levels is the best way to have peace of mind against such a situation.
Let’s say you have your liability insurance set at $300,000. That should cover many situations, but what if you are at fault in a catastrophic accident? It is not uncommon for a serious motor vehicle accident to lead to liability costs in excess of $300,000. Again, depending on your life circumstances, you may consider adding an umbrella policy to your insurance portfolio. A single umbrella policy can offer you added coverage for your motor vehicles, home, boat and motorcycle, usually at a much lower cost than your primary insurance.
These policies usually begin at $1 million but can increase your coverage to as high as $5 million. As with all insurance, it will be up to you to weigh the risk versus the cost and decide if it is right for you.
Broadly speaking, no-fault insurance, also known as Personal Injury Protection (PIP), protects you and your passengers’ medical expenses and loss of income in the event of a covered accident, regardless of who is found at fault. As long as the accident falls within the terms of your policy, no-fault coverage pays for medical bills, lost income and other related expenses incurred by you or your passengers.
There are three levels of no-fault, or PIP insurance to consider:
- PIP coverage is mandatory under New York law and provides up to $50,000 to reimburse for lost wages (max of $2,000 per month); for medical treatment; and for other reasonably necessary expenses.
- APIP (Added Personal Injury Protection) provides up to an additional $100,000 to cover basic economic loss.
- OBEL (Optional Basic Economic Loss): This coverage provides increased wage loss of $25,000 and also increases your monthly wage loss benefit to $4,000 per month.
SUM (Supplementary Underinsured/Uninsured Motorists Coverage)
Though it may be required by New York law, there are still plenty of motorists (particularly in other states such as Florida) driving on the road every day with no insurance. SUM insurance offers you an option to claim additional money damages from a permanent and severe injury caused by an uninsured or underinsured irresponsible motorist. These damages are called pain and suffering and the loss of quality or enjoyment of life.
The takeaway from this blog is that auto insurance coverage is not a one size fits all business. Often you buy insurance to protect you in claims from others, but unfortunately not to protect you from irresponsible others. There are many options out there, and while I always advise my clients to carry more than the required minimum, how much more you carry really depends on your individual life circumstances.
I will leave you with this thought: I have represented many, many victims of motor vehicle accidents over the last 35 years, and I have never had a case where a person complained about being over insured.
Howard B. Cohen concentrates his practice on the prosecution and trial of substantial accident and personal injury claims, which include automobile accidents, wrongful death claims, construction accident and fall-down defect claims. He also prosecutes substantial commercial and securities law and fraud claims. He can be reached at 716-854-4300 ext. 214 or email@example.com