Motorist insurance is a tricky thing.  One component that was traditionally ignored, neglected or misunderstood is Underinsurance or Supplemental Uninsured Motorist (“SUM”) coverage. This coverage is designed to “supplement” or add to the insurance coverage of the party who negligently causes your injury (or an injury of someone living in your household or riding in your car). The problem was that before June 18, 2018, drivers needed to actively purchase additional SUM coverage. For example, if Mr. Smith suffered a life-altering injury due to the carelessness of Mr. Jones and Mr. Jones only had $25,000 in bodily injury liability coverage, and Mr. Smith’s own policy contained $300,000 of SUM coverage, he conceivably would be able to collect $25,000 from the Jones policy and an additional $275,000 from his own policy (that is, $300,000 minus a credit for the $25,000 he already received). On the other hand, if Mr. Smith did not have additional SUM coverage, all he would recover is the $25,000 from Mr. Jones even if his own policy contained $300,000 in bodily injury liability coverage, to protect strangers. In fact, many people unwittingly drove around with bodily injury liability limits of $250,000 or more (at great expense) to protect strangers who they might hurt, without having additional SUM coverage to which protect themselves and their families (and which is relatively inexpensive).

About 15 percent of drivers do not have the legally required coverage. The unfortunate outcome for many drivers has been unexpected, exorbitant medical bills because they didn’t know supplemental coverage existed, or were unaware of their ability to purchase it and the modest price (about $33 a year for the lowest SUM coverage to about $135 a year for much higher coverage according to one car insurance company).

Gov. Andrew Cuomo recently signed a bill (A8519/S5644) that requires insurance companies to make available SUM coverage at the same level as bodily injury limits and removes caps related to such coverage. The law, which took effect on June 18, 2018, requires insurers to notify customers at least once a year about the availability of such coverage, explain what it is and encourage them to consider it.

Drivers who do not want to pay for it can sign a waiver to decline it or pay for a reduced amount of SUM coverage. Because drivers have an option to opt out, this is not a new, unsupported expense being forced on New Yorkers. Since drivers will pay for SUM coverage through their premiums, it’s not a new unfunded mandate on insurance companies. Rather, this is a sensible reform that provides individuals (who have been harmed through no fault of their own) and families a better chance to meet what can be severe medical costs. The physical and emotional toll an accident takes on an individual cannot be reversed.  Thanks to this legislation, the deck is now a little less stacked against victims.

Research by Alex Eidman