What is underinsured motorist coverage? The best way to explain the merits of this coverage is through an example of a situation that presents itself in our offices several times per year. A prospective client is referred to us. He or she has been injured badly in an auto accident, through no fault of their own. Maybe it was a hit in the rear, maybe the other car ran a red light, maybe alcohol was involved… The point is that someone else – a perfect stranger — is responsible.

Unfortunately, the merits of this case do not rest with these facts alone, but also must include investigation into whether that stranger possesses sufficient insurance to meet the needs of injured party. The harsh truth is that all too often, the answer is no. This answer is upsetting, because it easily could have a yes, had the client purchased insurance that provides protection from that IMperfect stranger.

New York State law requires that all vehicles registered here carry a minimum liability policy of $25,000 per person. No matter the injury, the maximum payout under a policy with these limits is $25,000. Break your finger or your neck and this may be the limit. This minimum has not changed in 20 years. While everything else in our lives costs more each year, this minimum limit has not been increased. This amount is nothing if you’ve been badly injured. It was nothing 20 years ago, and it is less than nothing now.

The good news is that there a solution. You can protect yourself with underinsured motorist coverage, which may be purchased as part of your own auto insurance policy and at minimal cost. This insurance will compensate you for your own serious injuries if a negligent driver does not carry sufficient liability coverage. In fact, you can protect yourself with underinsured motorist coverage up to same limits as your own liability insurance (the coverage on your vehicle that covers injuries you may cause to others). With this added coverage, you are protecting yourself from a negligent driver who has lousy coverage.

Assessing whether you have this coverage (and how much you have) can be a bit confusing. The reason for this confusion is that under New York State law, you are required and most likely already possess uninsured motorist coverage with the minimal limit of $25,000. This mandatory coverage provides very meager protection such as when another negligent driver is entirely uninsured or comes from a state with policy limits below $25,000.  Your underinsured limits should match your liability coverage. For example, if you have $250,000 in liability coverage, you should have underinsured coverage in the same amount. That means that if you are hurt in a car accident which is not your fault, by a vehicle insured with less than $250,000 in coverage, you may still recover up to $250,000 for your injuries. These benefits would apply to anyone in your vehicle at the time of the accident. They would even apply to you or a household family member injured in a car accident while a passenger in someone else’s vehicle.

Enhancing your coverage to increase your underinsured benefits is a no-brainer. The cost is negligible, generally a fraction of what you pay for your overall auto policy, and the benefit could be life changing.

It is amazing that several times a year, we are consulted by persons injured in a car accident who do not have this level of coverage despite having significant liability policy limits on their own vehicle. It is befuddling that an insurance agent can let a person leave his or her office without urging the purchase of such coverage …  and yet it happens all the time. If you don’t have sufficient coverage, call your agent and get it! If you aren’t sure whether you have it, call us and we will review your policy with you.