I was surprised to learn how much I did not know about my auto policy and then I was even more surprised to learn that I was not alone! As consumers, we pay hundreds or thousands of dollars each year for our automobile insurance and often times do not understand what we are paying (or not paying) for when it comes to coverage or what to do after we have been in a car accident.
Here is a quick guide to understanding your automobile insurance policy.
What is No-Fault?
Most people have heard that New York is a "No Fault" state, but are unaware how it works.
New York's No Fault law requires every car in New York to have insurance and requires that every insurance policy provide coverage to their insured in the amount of $50,000 for lost wages and medical bills resulting from an accident and regardless of who caused the accident.
You can purchase additional insurance over and above the standard $50,000 to reimburse you for lost wages and medical bills; this is called APIP (or Additional Personal Injury Protection).
What do I do if I have been in an accident?
If you have been in an accident, it is imperative to notify your insurance company right away. Once you notify your insurance company, they will send you a No-Fault application that you will need to fill out and send back to your insurance company within 30 days of the accident to be eligible for no fault benefits.
Your insurance company will then assign a claim number. Any time you go for medical care related to the accident, it is important that your provider knows you are being treated for accident related injuries and that you provide your no fault claim number. This allows your medical provider to submit your medical bills to your no fault insurance carrier instead of your health insurance company.
In exchange for being able to have your first $50,000 in lost wages and medical bills covered after an accident and regardless of fault, the No Fault law limits situations where an injured person can sue a person responsible for an accident.
In order to file a lawsuit against an at-fault driver, the injured person must prove they have suffered a "serious injury" as defined by New York Insurance Law §5102(d).
Death, dismemberment, significant disfigurement, a fracture, loss of a fetus, permanent injury and any injury that substantially disables you for 90 out of the first 180 days after an accident are defined as serious injuries. Without a "serious injury," an injured person is limited to their no fault benefits.
What is Bodily Injury/Liability coverage?
This portion of your insurance policy provides insurance coverage for you if you are at fault in causing an accident and cause a "serious injury."
Alternatively, if you are injured in a car accident and it is not your fault, it is the at-fault driver's bodily injury/liability insurance coverage that will compensate you for your serious injury.
The minimum bodily injury coverage required by New York Law is $25,000 per person/$50,000 per accident. This means there is coverage in the amount of $25,000 for any one injured person or $50,000 to be split by all injured people in any one accident. Coverage goes up in increments of, $50,000/100,000 or $100,000/$300,000 to the maximum $250,000/$500,000.
Additionally, you have the option of purchasing umbrella coverage, which is additional coverage over and above the limits of your automobile insurance policy. In a practical sense, you can have maximum liability insurance coverage ($250,000/$500,000) but if you are injured by another at-fault driver who has minimum insurance limits ($25,000/$50,000), you are likely to be limited to recovering only $25,000/$50,000 for your serious injuries.
How you can protect yourself?
The way to protect yourself from an at-fault driver with minimum (or no) automobile insurance coverage is to purchase Supplemental Underinsured Motorist Coverage (or "SUM coverage").
SUM coverage is essentially insurance for yourself which you can purchase in an amount equal to the amount of bodily injury/liability coverage you purchase in your policy. In the event you are injured and the at-fault driver doesn't have insurance, or doesn't have sufficient amount of coverage to compensate you for your injuries, you can make a claim against your SUM coverage.