Many people don't realize their car insurance is inadequate until it is too late, such as after they are seriously injured in a car accident or after they have been sued by someone else seriously injured in a car accident with them. Your auto insurance policy has several types of coverages that protect you from different risks. Some of these coverages are mandatory and some are optional. Each type of coverage is briefly discussed below with suggestions as to how best to protect yourself.
This is the coverage most people think of when they think about their auto insurance. It is the coverage that will protect you in the event you are in a car accident and get sued by someone claiming personal injury. The coverage obligates your insurance company to hire an attorney to defend you and to pay any verdict rendered against you,up to your liability limits. New York only requires drivers to carry $25,000 per person and $50,000 per accident of liability coverage, although you can purchase nearly any amount of coverage you want.
Beyond your liability limits, you are personally responsible to pay the judgment and the injured party could pursue whatever assets you own, including obtaining a lien against your house or a garnishment of your wages. If you have any assets at all, it makes sense to purchase more than the minimum liability limits. This is the most expensive coverage in your policy, but as you increase your limits, the cost does not go up in proportion to the amount of coverage. In other words, $50,000 worth of coverage is not twice as expensive as $25,000. As you go higher and higher in your limits, the cost per dollar of coverage continues to go down. Some may pay about $650 a year for $1,000,000 in liability coverage.
Who do you drive with most frequently? Your spouse? Did you know that New York insurance law does not require insurance companies to cover liability claims made by one spouse against another? So if you are seriously injured as a passenger in your spouse's car when he / she causes an accident, you will not be able to recover anything for your injuries beyond what no-fault insurance covers, unless you have purchased Supplemental Spousal Coverage.
Prior to 2003, nearly all insurance companies excluded such coverage from their policies. In 2002, New York passed a law, effective January 1, 2003, requiring insurance companies to offer this coverage in writing and explain what it covers, but they are not required to provide it unless you request it in writing. Check your policy. If you don't have it, call your broker and get it. It's not expensive and it will protect you in the event you are seriously injured while a passenger in your spouse's car.
This is what will cover your medical expenses and lost wages if you are injured in a car accident. In New York, every driver is required to carry $50,000 of Personal Injury Protection Benefits, commonly known as no-fault insurance. In the event of an injury arising out of a car accident, it covers each occupant of the vehicle for medical expenses, lost wages up to $2,000 per month and incidental expenses up to $25 per day, up to a total maximum of $50,000 per person. It is unnecessary to prove that anyone is at fault for causing the car accident. Indeed, you can be 100% at fault, but yet you are still entitled to coverage, thus the name" no-fault." The only step you must take is to file an application for no-fault benefits within 30 days of the accident.
For a small additional premium, you can purchase Optional Basic Economic Loss coverage, which adds an additional $25,000 in coverage and Additional Personal Injury Protection Benefits, which adds an additional $50,000 to the basic and optional coverage for a total benefit of $125,000 per person. I highly recommend this additional coverage as the price is nominal. For example, I pay around $400 per year for the mandatory coverage and about $12 per year for Optional Basic Economic Loss and about $24 per year for Additional Personal Injury Protection Benefits. The additional $36 per year will be well worth it in the event you are seriously injured and require surgeries and / or an extended hospitalization, which could easily result in an economic loss in excess of $50,000.
This is what will protect you in the event you are seriously injured in a car accident with an uninsured driver, an inadequately insured driver, or a hit and run. Although New York requires every driver to carry liability coverage in a minimum of $25,000 per person / $50,000 per accident, there are unfortunately situations where people are driving without insurance or where they flee the scene of an accident.
If you are seriously injured in one of these situations, under the uninsured motorist coverage in your auto insurance policy, your insurance company will step into the shoes of the uninsured driver and be responsible to you for any amount you otherwise could have recovered from the uninsured driver. Similarly, Underinsured Motorist Coverage protects you in the event that you are seriously injured in a car accident with someone that has less liability coverage than you. In this situation, your insurance company will step into the shoes of the other driver and be responsible to you for any amount you otherwise could have recovered from the other driver up to the limits of your Underinsured Motorist coverage.
New York only requires that vehicles carry $25,000 per person and $50,000 per accident of Uninsured Motorist coverage. Underinsured Motorist coverage is not required at all. Again, however, for a small premium, you can obtain up to $250,000 of this coverage. It could be the difference between a significant and nominal settlement, or nothing if you are injured in one of these situations. I have, unfortunately, represented many individuals that have sustained injuries with a value of several hundred thousand dollars at the hands of a negligent driver carrying a $25,000 policy. We then turn to the client's insurance carrier and find that they have no Underinsured Motorist Coverage and therefore the recovery is limited to $25,000, unless the driver that caused the accident has significant assets, which is never the case because if it were, they would not be driving around with a $25,000 liability policy.
Collision is the coverage that pays for the damage to your vehicle in the event you are in a car accident. It is optional, and if purchased, it will pay to repair the damage to your vehicle, or if the vehicle is totaled, it will pay the market value of the vehicle. If you purchase or lease a new vehicle, the market value might be less than you owe on the car loan or remaining lease payments. To protect against this risk, you could purchase gap insurance or obtain a gap waiver from the dealer. Gap Insurance will pay the difference between what your insurance company pays you and the balance of your loan or remaining lease payments in the event the car is totaled or stolen. A gap waiver is an agreement by the bank to waive the remaining payments after receiving the market value from an insurance company. You must get this at the time you purchase or lease the vehicle, not after an accident.
Our car accident lawyers at Sullivan & Brill, LLP have been representing New York residents that have been seriously injured in car accidents for over a decade. After an accident, determining which insurance coverage comes into play and under whose policy can be confusing. If you are injured in a car accident, you should immediately contact an attorney to cover your medical expenses and lost wages, and to preserve your right to file a claim against the responsible party.
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