We know it’s hard to get people excited about a new auto insurance law. But this time, the law is so important, and the impact that it will have on New Yorkers is so significant, that we think there is good reason for New Yorkers to feel, dare we say, excited. Our firm was part of the lobbying effort to get this bill passed, and we want to make sure all of our clients know about it.
The new law deals with Supplementary Uninsured Motorist coverage (SUM), the most important insurance you’ve never heard of. For too long, insurance companies have been taking advantage of customers when it comes to SUM coverage. This new law puts a stop to that.
What is SUM, and why do you need it?
SUM coverage is part of your own insurance policy, and its purpose is to protect you if you are injured in an auto accident by someone who has little or no insurance, or by a hit and run driver who cannot be found. This is extremely important coverage.
You absolutely need this insurance, and more importantly, you need the right amount of it. There are an awful lot of drivers on the road who have ridiculously low insurance coverage. In fact, the mandatory minimum coverage that drivers must have for bodily injury liability in New York is just $25,000 per person (and $50,000 per accident). If you are injured by a driver with one of these minimum policies, it doesn’t matter how catastrophic the injuries, the most you can ever hope to recover from the driver’s insurance company is $25,000. And the insurance company likely won’t just hand that over to you. You’ll usually have to hire a lawyer to get it.
How were insurance companies taking advantage of us?
The best way to protect yourself from uninsured and underinsured drivers is by purchasing a sufficient amount of SUM coverage. Under the law, you are entitled to buy SUM coverage in an amount equal to your liability coverage. But here’s the hitch – before now, you had to know to ask for it. The insurance companies weren’t required to tell you anything about this coverage, and they usually didn’t. Instead, they simply tacked on the very bare minimum, again, $25,000 in SUM benefits. That’s ice in the winter for you.
Why don’t insurance companies talk about SUM coverage? It isn’t a moneymaker for them and they have a disincentive to sell more of it. They line their pockets with the premiums from high-cost liability policies, and then undersell the cheaper but equally important SUM coverage.
Insurance companies were routinely selling people very expensive liability policies packaged with extremely minimal SUM coverage. We have had hundreds of people come through our doors with $250,000 liability policies and $25,000 SUM policies. This kind of policy will compensate other injured people, but it will do nothing for you if you are injured by an underinsured driver.
What does the new law do?
The legislation recently signed by Governor Cuomo, the Driver and Family Protection Act, requires insurance companies to provide all customers with SUM coverage in an amount equal to their liability coverage. Instead of putting the onus on customers to ask for adequate SUM coverage, the law puts the onus on insurance companies to provide it. Customers are free to opt out if they choose.
You should never opt out of this coverage. You should always purchase an equal amount of SUM and liability coverage, and you must consider your particular needs in deciding how much insurance is appropriate for you.
The new law becomes effective one hundred and eighty days after it was signed by Governor Cuomo, and it applies to all new policies and policy renewals. It will not change your existing policy. If your existing policy does not have sufficient SUM coverage, you should call your Insurance Company to add this coverage.
If you have any questions about this new law, or how much insurance is right for you, please call us at [ln::toll_free_phone] or contact us online for free advice.