One of the hardest parts of my job is telling the victim of an automobile accident, or their surviving family, that the car that caused their accident doesn’t have enough insurance to compensate them for their injuries/death.
But with proper planning, there are ways for accident victims to protect themselves from this scenario, without spending a lot of money.
The Truth About Automobile Insurance
Automobile Insurance policy limits are controlled by the individual states and, while virtually all states require their drivers to have minimum liability coverage (coverage that would pay for the damages to others in an accident), the stark reality is that many people drive without insurance due to affordability issues. Still, others take out minimum coverage, which can be as low as $10,000 in some states and is far too little to cover damages if someone is seriously hurt. And, there will always be drivers that cause an accident and then leave the scene (and therefore no insurance unless he’s caught) before police arrive. Finally, there are those that either do something that is not necessarily covered by their policy (driving under the influence) or inadvertently let their policy lapse. Bottom line is that when you drive, you should know that there are a lot of irresponsible people out there who put you in harm’s way, and without proper coverage, you won’t see a penny.
Compounding matters is that a person who has a minimum policy probably has limited assets to chase beyond the available insurance coverage.
In New York, the minimum limits of third-party bodily injury liability coverage, mandated by the Vehicle and Traffic Law are $25,000/$50,000 for bodily injury, which means up to $25,000 for any one person injured and up to $50,000 paid out collectively to multiple parties injured, which is still very low coverage.
As a separate note, in New York, every car has No-Fault coverage, which does protect an accident victim to some extent, paying up to $50,000 for lost wages or medical expenses, but this blog deals with your separate right to sue the tortfeasor or the person who caused the accident.
How Does Uninsured Motorists Coverage Work?
The uninsured or underinsured coverage (UM/UIM) is a feature available on every auto policy and offers bodily injury protection for you, all family members who reside in your household, and occupants of your car, in the event you or they are injured as the result of negligent actions by an uninsured vehicle or hit-and-run motorist. If your liability policy is a minimum policy of $25,000 then your UM policy similarly has $25,000 of protection. It is probably the most single important insurance you can have after liability and increasing it to $100,000 or $300,000 is not very expensive.
How does it work? It’s pretty simple actually. You are driving your car and get T-boned. You break your leg and require surgery. Now you want to sue the other driver, but he only has a $25,000 policy and your lawyer says your injury is worth more along the lines of $250,000. He asks for a copy of your insurance policy and finds out you have $300,000 of UM coverage on your vehicle. The other driver’s carrier agrees quickly to give you their $25,000. Now, you can make a UM claim to your own carrier, seeking the difference between your policy and the $25,000 you recovered, meaning you can collect another $225,000 from your own carrier. Now, of course, your carrier may not agree with your lawyer’s valuation and the parties can negotiate a fair settlement. Alternatively, if your lawyer can’t negotiate a fair deal, then under UM/UIM insurance, rather than go to trial and wait years, you can simply attend an arbitration with a third-party arbiter, who listens to the facts in a mini one-day trial and determines how much you should be paid. Pretty simple, right? Regardless of the arbiter’s decision, even if you are only awarded $200,000, that is still $200,000 more than you would have gotten without UM coverage.
Other Insurance Protection
OK, so what other options do you have if you are hurt in a car accident and both you and the other driver, who caused the accident, have limited policies due to coverage issues, then what are your other options?
- You may be able to tap into a relative’s policy. As mentioned above, a UM/UIM policy provides coverage for all relatives living in a household. So, you are a 20-year-old student, with minimum coverage and another car hits your car and you get hurt. Once again, you can collect your own $25,000 of UM coverage. But, you also live with your parents, who own a house and a boat and therefore keep a higher policy with UM. You can again collect the difference between their UM and your $25,000.
- If you are not covered by a family member’s policy in your household, then another alternative is to file a claim with the Motor Vehicle Accident Indemnification Corporation (MVAIC), a fund designed to pay up to $25,000 of coverage to an injury victim where insurance is non-existent. Two important factors here are that MVIAC usually requires a fracture or surgery before they will pay. Soft tissue is not generally considered. Also, file a claim immediately, as they have strict timelines.
- Lastly, I would suggest paying a little extra to get Supplemental Spousal Liability Insurance, which is coverage that protects your spouse from your bad driving. This is necessary because, while your liability policy should provide coverage for every passenger in your vehicle, in New York, it will most likely not provide any liability coverage when the injured passenger is your spouse. So, for example, husband and wife are driving home from friends’ late at night. The husband falls asleep and the car hits a tree, injuring the wife. Without supplemental coverage, she would collect no money.
As they say, “knowledge is power” and from this blog, you should now understand that a lot of people are poorly insured or uninsured. You should also now realize that insurance companies are out to make a profit, thus creating obstacles to hurdle before they pay you a cent. But, if you have proper coverage, and hire an experienced lawyer as a partner, you will be a lot better off.