Car Insurance
New York’s minimum car insurance requirements may not provide enough protection after a serious accident. This guide explains the major types of auto coverage and what Long Island drivers should consider when choosing their limits.
Most people buy car insurance because they have to. They know New York requires insurance to register and drive a vehicle, they get a quote, choose their coverage and pay the premium.
“There is a big difference between having car insurance and having enough car insurance.”
Steven Palermo
As a Long Island car accident attorney, I see that difference all the time. Unfortunately, people often do not learn what their insurance actually covers until after an accident. By then, there is nothing they can do to change the policy that was in effect on the date of the accident.
Car insurance is really a collection of different coverages bundled into one policy. Some coverage protects you when you injure someone else. Some protects you and your family when someone else injures you. Some pays medical expenses and lost wages. Other coverage protects your vehicle or your personal assets.
That is why I do not think the question should simply be, “How much car insurance do I need?” The better question is, “What am I trying to protect, and do I have enough coverage to protect it?”
New York requires drivers to carry certain minimum automobile insurance coverages. Currently, the minimum bodily injury liability coverage is $25,000 per person and $50,000 per accident. The minimum property damage coverage is $10,000. New York also requires $50,000 in basic No-Fault coverage and minimum uninsured motorist protection.
Those are minimums. They should not necessarily be viewed as recommendations.
In fact, the New York State Department of Financial Services advises consumers to consider coverage beyond the minimum requirements because of the potential costs associated with repair bills, medical expenses and lawsuits.
When I look at an automobile insurance policy, I am much more interested in the individual coverages and limits than simply whether someone is “fully insured.”
Let’s look at the coverages I believe Long Island drivers should understand.
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01
Liability
Bodily Injury Liability Protects you if you cause an accident and injure someone else. This is the primary coverage that defends you and pays the injured person’s claim.
NY minimum: $25K / $50K
Protects your assets
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02
Your Protection
UM / SUM Coverage Covers you and your family when the at-fault driver has no insurance or not enough. SUM can generally be purchased up to your bodily injury limits.
Basic UM required
Most overlooked
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03
Medical & Wages
No-Fault (PIP) Pays qualifying medical expenses and a portion of lost earnings after an accident regardless of fault, subject to the No-Fault rules.
NY minimum: $50K
Required
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04
Extended No-Fault
Additional PIP (APIP) Increases the No-Fault protection available under your policy above the basic $50,000, an optional add-on worth considering if you have a good income or a family to support.
Optional add-on
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05
Liability
Property Damage Liability Pays for property you damage in an accident you cause. In a multi-vehicle crash involving expensive vehicles, the minimum does not go far.
NY minimum: $10K
Often too low
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06
Excess Liability
Umbrella Insurance Provides an additional layer of liability protection above your auto and homeowners policies. Important for people with substantial assets to protect.
For significant assets
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07
Your Vehicle
Collision Coverage Protects your own vehicle against physical damage from a collision, generally regardless of fault, subject to your deductible. Usually required if you finance or lease.
Lender may require
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08
Your Vehicle
Comprehensive Coverage Covers damage to your vehicle from causes other than a collision, such as theft, vandalism, and certain weather-related damage.
Value-dependent
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09
Convenience
Rental Reimbursement Helps pay for a rental vehicle while your car is being repaired following a covered loss.
Minor but useful
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10
Convenience
Towing & Roadside Helps with towing and related roadside expenses, depending on your policy.
Minor but useful
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11
Household
Spousal Liability Addresses liability claims involving injuries caused by the negligence of a spouse. An area consumers often overlook entirely on the declarations page.
Ask your agent
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Bodily injury liability, commonly called BI coverage, protects you if you cause a car accident and someone else is injured.
For example, suppose you make a left turn, fail to see an approaching vehicle and cause a collision. The other driver suffers serious injuries and brings a claim against you. Your bodily injury liability coverage is the primary insurance available to defend you and pay the injured person’s claim.
New York’s minimum BI limits are $25,000 per person and $50,000 per accident.
When you see limits written as $100,000/$300,000, for example, that generally means the policy provides up to $100,000 for bodily injury to one person, subject to a total limit of $300,000 for everyone injured in that accident.
There is no answer that is right for everyone.
I would look at several factors.
Who is driving the vehicles in your household? Do you have teenage or young adult drivers? How frequently are the vehicles driven? What assets do you have to protect? What is your income? What would higher limits actually cost?
The last question is important. I would never tell someone to buy insurance they simply cannot afford. But I would at least price different limits before making that decision. You may find that substantially increasing your protection does not increase your premium as much as you expected.
I hear variations of this question frequently.
If someone has $100,000 in liability coverage, why buy $250,000 or $500,000? Won’t the injured person’s attorney just accept whatever insurance is available?
Sometimes.
If I represent someone whose injuries are not catastrophic and the available insurance is reasonably close to the value of the claim, I may recommend accepting the policy limits rather than trying to pursue the individual defendant personally.
There are practical reasons for that.
Obtaining a judgment is one thing. Collecting it is another.
If you pursue someone beyond their insurance coverage, you have to determine whether that person actually has assets or income that can legally and realistically be reached. That can involve additional litigation, investigation, expense and time. A large judgment against someone who has no collectible assets may ultimately have very little practical value.
That reality often encourages settlements within available insurance limits.
But I would never rely on that as my personal asset-protection strategy.
The situation can look very different when someone suffers a catastrophic, life-changing injury.
Imagine an accident leaves a young person permanently disabled and unable to work, or someone suffers a severe brain injury, paralysis or another injury that will affect that person for the rest of his or her life.
Now imagine the responsible driver has substantial personal assets but inadequate liability insurance.
The injured person may not be willing to simply accept the insurance policy and walk away.
As a Long Island personal injury attorney, pursuing a defendant personally beyond the insurance limits is not something I want to have to do. But when a client’s injuries are catastrophic and the available insurance is nowhere near adequate compensation, that discussion may have to occur.
Other attorneys may be even more willing to pursue personal assets when they believe there is a realistic opportunity to collect them.
That is why my general philosophy is simple:
Protect the assets you would not be comfortable losing.
You buy bodily injury liability insurance hoping you will never need it. But if the worst happens, you want enough coverage standing between the claim and your personal assets.
If there is one part of a New York automobile insurance policy I wish more people understood, it is UM and SUM coverage.
UM means uninsured motorist coverage.
SUM means supplementary uninsured/underinsured motorist coverage.
These coverages are designed to protect you and other insureds under your policy when the person responsible for an accident has no insurance or does not have enough insurance to adequately compensate you for your injuries.
New York requires basic UM coverage under Insurance Law §3420, but drivers can purchase additional SUM protection. SUM coverage can generally be purchased up to the bodily injury liability limits carried on the policy.
Think about this for a moment.
You might purchase $250,000 or $500,000 in bodily injury coverage because you want to make sure someone you accidentally injure is protected and because you want to protect your own assets.
That is smart.
But shouldn’t you provide similar protection for yourself and your family?
Suppose you are seriously injured by someone carrying New York’s minimum $25,000 bodily injury policy.
A $25,000 policy can disappear very quickly when someone has suffered a serious injury.
This is not a rare scenario. Nationally, one in three drivers is either uninsured or underinsured, according to the Insurance Research Council, and that rate has been climbing for years.
If you have substantial SUM coverage on your own policy, you may have an additional source of compensation available after the responsible driver’s coverage is exhausted, subject to the terms and conditions of your policy.
Without adequate SUM coverage, you may find yourself seriously injured with very little insurance available.
There is another practical point I have learned from handling car accident cases for many years.
People who drive irresponsibly are sometimes irresponsible about their insurance as well.
The driver who is speeding excessively, driving recklessly, driving an unsafe vehicle or otherwise taking unnecessary risks may also be the person carrying minimum insurance or, worse, no valid insurance at all.
You cannot control how much insurance the person driving toward you on the Long Island Expressway carries.
You can control how much protection you purchase for yourself.
That is why SUM coverage is one of the first things I would look at when reviewing my own automobile insurance policy.
New York is a No-Fault state.
Basic No-Fault, also called Personal Injury Protection or PIP, generally provides up to $50,000 per person for qualifying economic losses following a motor vehicle accident, regardless of who caused the accident. It can cover things such as medical expenses and a portion of lost earnings, subject to the rules and limitations of New York’s No-Fault system.
Fifty thousand dollars may sound like a lot until someone suffers a significant injury.
Medical treatment can become expensive very quickly. If you are unable to work, lost earnings can also consume No-Fault benefits.
New York drivers can purchase Additional Personal Injury Protection, commonly called APIP, which increases the No-Fault protection available under the policy. DFS specifically identifies additional No-Fault benefits as an optional coverage consumers can purchase above the basic $50,000.
I think this is another coverage worth discussing with your insurance agent, particularly if you earn a good income, support a family or would have difficulty absorbing an extended period out of work.
The goal is not necessarily to buy every possible option. It is to understand what would happen financially if you were seriously injured and could not work for several months.
Property damage liability coverage pays for property you damage in an accident you cause.
The New York minimum is currently only $10,000.
Think about the vehicles you see every day on Long Island.
There are plenty of cars, SUVs and trucks on the road worth $50,000, $75,000, $100,000 or more.
Now consider a multi-vehicle accident.
You lose control, hit one vehicle and push it into another. Suddenly, you may be responsible for damage to two or three expensive vehicles.
Ten thousand dollars does not go very far in that situation.
This is another area where I would ask my insurance agent what substantially higher property damage limits actually cost. You want enough coverage that an ordinary mistake behind the wheel does not turn into a serious financial problem.
People with significant assets should also consider discussing an umbrella policy with their insurance professional.
An umbrella policy generally provides an additional layer of liability protection above certain underlying policies, which may include your automobile and homeowners insurance.
For example, depending on the terms of the policies, someone with $500,000 in automobile liability coverage and a $1 million umbrella policy may have another layer of liability protection available once the underlying automobile coverage is exhausted.
Umbrella coverage can be particularly important for people with substantial savings, investments, real estate, high incomes or other assets they want to protect.
There is an important distinction, however.
Do not automatically assume that because you have a liability umbrella, you also have additional SUM protection for injuries you or your family suffer.
Ask.
Specifically ask your insurance professional what happens if you are seriously injured by an uninsured or underinsured driver and whether your umbrella provides any additional UM or SUM protection. Insurance products and policy language vary.
Collision coverage protects your own vehicle against physical damage resulting from a collision, generally regardless of who was at fault, subject to your deductible and the terms of the policy.
If you finance or lease a vehicle, your lender or leasing company will generally require physical damage coverage.
If you own an older vehicle outright, you may decide that collision coverage is no longer worth the premium. That becomes an economic decision based upon the vehicle’s value, your deductible and what it would cost you to replace the vehicle.
Comprehensive coverage generally protects your vehicle against covered losses other than collisions.
Depending upon the policy, this can include things such as theft, vandalism and certain weather-related damage. DFS describes comprehensive coverage as protection for damage to your vehicle from causes other than a collision.
Again, whether you need it depends largely upon the value of your vehicle and your financial circumstances.
These are smaller coverages, but they can still be useful.
Rental reimbursement can help pay for a rental vehicle while your car is being repaired following a covered loss. Towing or roadside coverage can help with towing and related roadside expenses, depending upon your policy.
These are not the coverages that usually determine whether a family is financially protected after a catastrophic accident, but they can save you aggravation and out-of-pocket expenses.
New York automobile policies also address liability claims involving spouses. This is an area consumers may overlook entirely when reviewing a declarations page.
If you are married, I recommend asking your insurance agent specifically how your policy handles injuries caused by the negligence of a spouse and whether you have the appropriate spousal liability protection for your household. DFS includes spousal liability among the items consumers should review when evaluating an automobile policy.
I cannot give everyone on Long Island one number.
Someone who rents an apartment, has limited savings, drives an inexpensive vehicle and is struggling with monthly expenses is in a very different position from someone who owns a home, has significant savings and investments, earns a substantial income and has three teenage drivers in the household.
But I can tell you how I would approach the decision.
| 1 | Don’t default to the minimum
I would not automatically buy New York’s minimum coverage simply because it is legal. Minimum insurance means exactly that: the minimum required by law. |
| 2 | Price several liability limits
I would obtain prices for several different liability limits before deciding. Find out what the additional protection actually costs. |
| 3 | Match property damage to real vehicle costs
I would make sure my property damage limit reflects what vehicles actually cost today. |
| 4 | Protect your assets
If I had assets that I could not comfortably afford to lose, I would want sufficient liability insurance protecting those assets and would seriously consider an umbrella policy. |
And finally, I would pay very close attention to my SUM coverage.
I find it strange that someone will willingly purchase substantial liability insurance to protect a stranger they might injure but carry relatively little insurance to protect themselves and their own family if someone else causes the accident.
If I were prioritizing coverages, SUM would be near the very top of my list.
Most people never read their automobile insurance policy. Many barely look at the declarations page.
I understand why. Insurance is confusing, and nobody wants to spend an afternoon thinking about catastrophic car accidents.
But after an accident is the worst possible time to discover that you purchased the wrong coverage.
I have represented accident victims who suffered significant injuries only to discover that the person who caused the accident had minimal insurance. Sometimes there are other potential sources of recovery. Sometimes there are not.
A few minutes spent reviewing your policy with a knowledgeable insurance professional can make an enormous difference.
Look at your bodily injury limits. Look at your property damage limits. Look closely at your SUM coverage. Review your No-Fault and APIP options. If you have meaningful assets, ask about an umbrella.
Most importantly, think about what you are trying to protect.
Insurance is something we all hope we never need. But if the day comes when you do need it, that is when you find out what you actually bought.
If you have questions about your own coverage, or you are trying to figure out where you stand after a serious accident, feel free to reach out to Palermo Law. We are happy to talk through your options.
New York currently requires at least $25,000 in bodily injury liability coverage per person, $50,000 per accident, $10,000 in property damage liability coverage, $50,000 in basic No-Fault benefits and mandatory uninsured motorist protection. These are legal minimums, however, and may provide inadequate protection after a serious accident.
In my opinion, many drivers should consider substantially more protection. A serious injury claim can easily exceed $25,000. Whether higher limits make sense depends upon your finances, assets, household drivers and the cost of increased coverage. I recommend pricing several different limits before making a decision based solely on premium.
Yes. Your insurance policy does not necessarily place a ceiling on your personal legal liability. If a claim or judgment exceeds available insurance, your personal assets may potentially become an issue. Whether pursuing those assets is practical depends upon the circumstances, which is why adequate liability coverage is so important.
SUM stands for supplementary uninsured/underinsured motorist coverage. It can provide additional compensation when you are injured by someone who has insufficient liability insurance, subject to your policy's terms and limits. New York allows drivers to purchase SUM coverage up to their bodily injury liability limits.
Health insurance and SUM coverage serve different purposes. Health insurance may pay covered medical expenses, but it does not compensate you for all damages resulting from a serious car accident. SUM coverage can potentially provide compensation when the person who injured you does not have sufficient liability insurance.
I generally believe this is worth serious consideration. If you carry substantial bodily injury limits to protect someone you might accidentally injure, it makes sense to consider substantial SUM limits to protect yourself and your family. The right amount depends upon your circumstances and the options available under your policy.
Basic New York No-Fault insurance provides up to $50,000 per person for qualifying economic losses resulting from a motor vehicle accident, including covered medical expenses and a portion of lost earnings. It generally applies regardless of fault, although important eligibility requirements, deadlines, exclusions and limitations apply.
I would be uncomfortable relying on $10,000 given the cost of vehicles today. Damage to one expensive vehicle can exceed that amount, and a multi-car accident can create substantially greater exposure. I recommend asking your insurance agent what higher property damage limits cost before choosing the statutory minimum.
Possibly. An umbrella can provide another layer of liability protection above your underlying insurance and can be valuable for someone with substantial assets or income. However, do not assume an umbrella automatically provides additional UM or SUM protection. Ask your insurance professional specifically what your particular umbrella policy covers.
I recommend reviewing it at least annually and whenever something significant changes. Buying a home, accumulating assets, adding a teenage driver, purchasing an expensive vehicle, getting married or substantially increasing your income are all good reasons to review your coverage and determine whether the limits you previously selected still make sense.
The information provided in this blog is for general informational purposes only and reflects the opinions of the author. It is not legal advice and does not create an attorney-client relationship. Every case is different, and results depend on the specific facts and applicable law. You should not act or rely on any information in this blog without first seeking advice from a qualified attorney regarding your individual situation.
