Everyone knows that the minimum liability coverage for car insurance in New York is $25,000. Insurance is protection. For example, if you are a distracted driver and struck and injured another driver or pedestrian, your car insurance will compensate the accident victim, up to your policy limits ($25,000 is the bare minimum required in New York). An insurance company is a financially responsible entity, and the public policy behind mandating insurance coverage for motor vehicles is profoundly sound and valid.
What happens however if you are injured by a negligent driver and your injuries have a compensable value in excess of the adverse driver’s minimum $25,000 policy limit. You may proceed against the negligent driver personally; but, that would entail obtaining a judgment (litigating and trying the lawsuit to verdict) and moreover enforcing the judgment. In most instances, that is impractical or pointless. The accident victim would have a “paper judgment” that would be worthless. The realities, impracticalities, limitations, costs and difficulties of enforcing a personal injury judgment against your average Joe disway any attorney from advising or pursuing same.
So what do you do? You make sure that you have the right policy limits in car insurance coverage – and that is uninsured/underinsured policy limits. Uninsured/underinsurance coverage protects you in the event the adverse vehicle had either no insurance (say a lapse in coverage due to non-payment of premium) or the minimum coverage. If you have coverage of say $100,000 in uninsured/underinsurance coverage, you would be able to collect the $25,000 from the adverse vehicle (using the above illustration) and then collect $75,000 from your own insurance company (your insured/underinsurance policy limits are offset by the adverse vehicle’s liability coverage, here $100,000 – $25,000 = $75,000).
So it is sound advice to ensure you have the right uninsured/underinsurance coverage to protect you. You must note that your uninsured/underinsured coverage must be equal to your liability coverage. In other words, you cannot have liability coverage of $25,000 and uninsured/underinsured coverage of $100,000. You may have liability coverage of $100,000 and uninsured/underinsured coverage of $100,000 or $300,000 in liability coverage and $300,000 in uninsured/underinsured coverage (and even opting for umbrella coverage). And the irony is that uninsured/underinsured and umbrella coverage are relatively inexpensive!
Please do not confuse the different lines of coverage in an automobile insurance policy. The standard auto policy has the following lines of coverage: liability; uninsured/underinsured; collision; comprehensive; and no-fault. Often clients say that “I have full coverage on my new car,” but it turns out to mean collision and comprehensive coverage, and liability is at the minimum and by definition so is uninsured/underinsured coverage. This is a poor designed policy and affords no real protection to the client (aside from protecting the vehicle’s finance or lease company).
It would behoove a consumer to consult – for free – with an experienced personal injury lawyer (who has no interest unlike an insurance broker or agent) to determine the right coverage for him/her and his/her family. Please feel free to contact the New York City law firm of Michael Manoussos & Co PLLC for a free and quick consultation ( no strings, just good and free advice).
Insurance should protect and compensate the accident victim – whether it is someone else and especially if it is you.