The Most Important Insurance You Can Own – Get SUM!

For most of us, the greatest risk that we assume is getting in a car on a daily basis.  According to a report by the National Highway Traffic Safety Administration, in 2014, there were more than 6 million motor vehicle accidents in the United States.  Those accidents resulted in approximately 2.3 million injuries and more than 32,000 fatalities.

Consequently, a little known insurance coverage may be the most important form of insurance that you can secure for you and your loved ones.  New York State only requires drivers to carry minimum liability coverage limits of $25,000 per person.  Unless one is ‘lucky’ enough to suffer at the hands of a high net worth individual with a large insurance policy, recovery for serious personal injuries will likely be capped by the negligent driver’s inadequate insurance coverage.  SUM coverage can make the difference between substantial dollar recovery and an inadequate recovery.

The cost of SUM coverage is small.  Depending on the amount of primary auto insurance that you purchase to insure strangers whom you might injure, the cost of SUM coverage to protect you and your family from strangers who might injure you ranges from $25 to $150 per year.  While costs may vary depending on the drivers, location, and type of vehicle insured, a survey in the Metro-New York area reveals the following modest annual cost for SUM coverage:

SUM Coverage Additional Premium*
$25,000 $25
$100,000 $50
$250,000 $125
$500,000 $150
*The additional premium refers to the added cost of SUM coverage assuming that you have an equal amount of liability insurance.  That is, if you paid $850 per year for $500,000 of liability insurance, the additional cost of $500,000 of SUM coverage would be $150.

Early in my career, I was confronted with two similar cases.  They had two very different outcomes, only because one client had SUM coverage and the other did not.

In the first scenario, a husband and wife parked on the side of a busy street by their synagogue during the Jewish High Holidays.  As the wife was walking along the street, an 80-year old grandmother came speeding down the road and struck her.  The wife sustained serious pelvic injuries and endured a significant stay in the hospital.

In the second scenario, a man was crossing a Manhattan street in the crosswalk, with the light, when he was struck by a taxi.  The taxi dragged him down the street, causing a debridement injury as his flesh was separated from his bones.  The poor man received hyperbaric chamber therapy and endured his own long and expensive hospital stay and a painful recovery.

Both of the drivers who caused the accidents were effectively judgment-proof after their $25,000 liability policies were exhausted.  However, in the first scenario, the woman recovered $500,000 under her own SUM coverage policy through her husband’s car insurance carrier.  In the second scenario, the man, who lived in New York City, did not own a car, and did not have any SUM coverage.  Thus, his recovery was limited to the taxi’s meager $25,000 insurance proceeds.

As these examples illustrate, SUM coverage is not limited to accidents between motor vehicles.  It also covers any accident involving a motor vehicle.  It covers pedestrians and bicyclists hit by a car.  It can also cover “hit and run” circumstances.

To make a claim for SUM coverage, you must first provide timely notice of your claim to your insurance company.  Second, you must obtain the full insurance proceeds from the negligent driver.  Third, your SUM coverage must be greater than the amount of the at-fault driver.  Fourth, you can then proceed with a claim against your own SUM insurance provider.  Unlike the typical car accident, which requires a lawsuit, the SUM insurance policy typically requires arbitration if you and your insurance company cannot agree on the value of your claim.  Finally, with any payment, the SUM insurance provider is entitled to an offset or reduction for any payment that you receive from the at-fault driver.  So in the first example, the pedestrian first had to recover the full $25,000 from the 80-year old driver who struck her.  Then, she was able to recover on her husband’s $500,000 SUM policy that amount less the $25,000 received, or $475,000.

Insurance companies are in the business of collecting your hard-earned premiums, and then denying your claims. I sue them for a living, and I hate to send them business.  When it comes to personal financial planning, one size does not fit all.  But for most, given the inherent risks and frequency of driving a car, SUM insurance is among the most important insurance coverage that you can buy.  Get SUM!

The Law Office of Todd J. Krouner has a proven track record of helping personal injury victims.  If you or a loved one have been injured in an accident involving a motor vehicle, and you wish to determine if you have a strong case, please contact us for a free consultation at (914) 238-5800.