The law requires all drivers to have automobile insurance to insure themselves against being sued by other people injured in a motor vehicle accident involving you and/or your vehicle. Purchasing higher policy limits decreases your risk of personal financial responsibility in case of a serious injury.
However, what happens when you are injured in a motor vehicle accident and the other driver or car has no insurance or a limited amount of insurance which is insufficient to cover your injuries? Under these circumstances, you must proceed under the SUM portion of your policy (a/k/a supplementary underinsured motorist benefits) for compensation for these injuries. Unfortunately, since it is very inexpensive to purchase, and may result in large payouts by the insurance carrier, many insurance carriers do not advise you to raise your SUM coverage as they would do with the liability portion of your policy. You must ask for it! Otherwise, you may only end up with $25,000 worth of SUM coverage which effectively is no coverage at all.
Under New York State Law your SUM coverage must exceed the liability coverage of the offending vehicle in order for it to be applicable. For example, if you are in a collision with a drunk driver and are seriously injured and the other driver’s liability limits are $25,000 (minimum required by New York State Law) and your SUM coverage is also $25,000, then you are limited to the $25,000 coverage for the other vehicle. On the other hand, let’s change the scenario slightly. If the drunk driver had a minimum policy of $25,000, but you had $100,000 SUM coverage, then once the other car pays their $25,000 policy limits, you can pursue your policy for an additional $75,000.
With respect to being injured by another vehicle that was uninsured, you are relegated to pursuing a claim against your SUM coverage for compensation of these injuries. Thus, if you only have $25,000 worth of coverage, that is the most you can receive. Accordingly, the higher SUM coverage you have the greater amount of compensation you can receive.
Other factors to consider are that since SUM is considered a first party benefit that you purchase in addition to your other coverages, then utilizing it should not increase your insurance premium. You can verify this fact with your carrier before filing your claim.
Furthermore, an SUM claim does not require a trial in front of a Judge or jury. If a claim does not settle, then you proceed to arbitration and sit around a table with your attorney, the insurance carrier’s attorney, and an arbitrator to discuss the case and reach a decision. It is much less time consuming and less stressful.
The bottom line, it is great to have high coverage for other people involved in your accident, but you must protect yourself as well. Check your policy. Make sure your SUM coverage at least matches the amount of your liability coverage. If not, contact your carrier, get price quotes and purchase as much SUM coverage as you can.