As the economic downturn worsens, many people will likely be looking for new ways to cut corners in every facet of their lives to try to make ends meet. One of the areas already being impacted is automobile liability insurance coverage. This is the insurance that covers you when you are in an auto accident and are injured because of the fault of another driver. In some states like California and Arizona, as many as 20% of drivers have no insurance at all. In New York, the estimated percentage of drivers without insurance is lower - estimates range from 3 to 8%. We can expect that number to grow as those affected by the economic downturn opt to pay rent or buy food rather than pay their automobile insurance premiums.
New York Drivers Need to Protect Themselves By Making Sure They Have Enough "SUM Coverage"Even before the latest economic crisis began, drivers in New York could choose to register a motor vehicle and buy only the minimum $25,000 of liability coverage required by law. In fact, for people who have had multiple accidents, $25,000 is frequently all the liability insurance a company will sell to them. These people are in what the insurance companies refer to as the "high risk pool." Not coincidentally, the people who cause the most accidents and injure the most people on the road are well-represented in this high risk group.
That is why now it is more important than ever for drivers in New York to make sure that they have enough of their own insurance to protect themselves in case they are in an automobile accident caused by someone who has little or no liability insurance to pay you for your injuries. Supplemental Uninsured/Underinsured Motorist insurance (referred to as "SUM coverage") is a type of insurance that you can buy to protect yourself and your family from those uninsured or underinsured drivers. By having enough SUM coverage, you no longer put yourself at the mercy of those drivers who either cannot afford insurance or cannot afford enough insurance because of their history of being bad drivers and getting into lots of accidents.
Most people already have SUM coverage and do not know it. However, the vast majority have only the minimum amount of SUM coverage required by law, which is $25,000. This is because agents and insurers rarely discuss SUM coverage when you purchase insurance, unless you specifically ask about it. If you buy only the minimum amount of SUM coverage, it will benefit you only if you are injured by a driver who has no insurance at all. Also, you will only be entitled to receive up to $25,000 to cover the damages and expenses you will incur as a result of being in an accident.
How Much SUM Coverage Should You Have?A quick look at the declarations page of your automobile insurance policy (the page with all of the numbers and prices on it) will tell you how much SUM coverage you currently have and how well you and your family are protected.
As a rule, you should always have the same amount of SUM coverage as liability coverage. For example, if you buy an auto insurance policy with liability coverage of $250,000 or $500,000 (which covers damages that you would owe others if you caused an accident), you can and should protect yourself and your family by purchasing an equal amount of SUM coverage - $250,000 or $500,000. The cost of SUM coverage is reasonably priced, and is much less expensive than the cost of liability coverage.
Also, if you have an "umbrella" insurance policy that covers you and your family above your auto liability and homeowners' insurance policy limits, you can get even more SUM coverage added on to that umbrella policy at a modest cost.
Don't Wait Until It's Too LateUnfortunately, most people learn they did not buy enough SUM coverage when it's too late - after they have been seriously injured in an accident by a driver who is either uninsured or has only minimum insurance. Only then do they recognize that they could have protected themselves by purchasing sufficient SUM coverage that would have helped them replace their lost wages and pay for other accident-related expenses. This group of surprised and sorry victims is bound to grow in the near future as more and more people begin to drive with less and less insurance.
One final note: If you are in an auto accident, it is very important that you immediately notify your SUM insurance company about the accident. (Click on the following link to read about what other steps you should take after being in an auto accident.) Many insurance policies provide that you will waive your right to make a claim for SUM coverage unless you give notice of the accident to the insurance company soon after it happens. It may seem obvious that you should notify your own insurance company immediately after you are in an accident. However, when you are driving someone else's car or are a passenger or pedestrian involved in an accident, it may not occur to you that you could also be covered by your own insurance policy. SUM coverage typically insures you in all of these situations. Immediately notifying your SUM insurance company is important to preserving your rights and helping you recover from your injuries.