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Three Key Coverages That Your Automobile Insurance Policy Must Have!

Anyone who watches television or listens to the radio knows that an insurance companies primary marketing strategy is humor.  Most commercials rely on funny characters and cute slogans to get our attention. Judging from the amount of companies taking this approach and the amounts of commercials playing on a daily basis, it’s a strategy that works. While humor may sell insurance policies, there are certainly some very important practical considerations that a consumer should consider prior to purchasing an insurance policy. Among those issue would be the insurance company’s financial rating, claims reliability and customer service reputation.

While those are certainly important factors, maybe the most important consideration in choosing an insurance company is the types of coverages that you are being provided by your potential policy and the cost for those amounts of coverages. There are three particularly important coverages that you should keep in mind when choosing a policy: Your Bodily Injury Limits (BI limits), Personal Injury Protection limits (PIP limits) and your Uninsured/Supplemental Underinsured Motorist limits (UM/SUM limits).

Bodily Injury Limits

Your BI limits financially protect you and any operators of your vehicle from injuries caused by the negligent operation of your vehicle. For example, if you rear-end somebody and they are injured, your insurance company will pay for the cost of any injury caused by the negligent operation of your vehicle up to your BI policy limits. This means that any injuries caused by the negligent operation of your vehicle that exceed your policy limits will become enforceable against you. In New York the minimum allowable limits by law for your BI coverage is $25,000 per injured person and $50,000 for all injured parties in the accident. That is really not a lot of coverage. I would recommend increasing that coverage, especially if you have assets such as a home, savings accounts and/or cars.

Personal Injury Protection Limits

Your PIP limits are more commonly known as no-fault limits. This type of coverage pays for any medical expenses, lost wages or out of pocket expenses you incur following an accident. The minimum amount of PIP coverage is $50,000. That means once your medical bills, lost wages and out of pocket expenses combine to exceed $50,000 your coverage will be exhausted and you will have to use private health insurance and disability policies if you have them. If not, you will have to pay the rest out of pocket. Insurance carriers will offer Additional Personal Injury Protection and I recommend that you purchase it. While the $50,000 PIP limit is usually enough for mild injuries, if you suffer a serious injury your policy will be quickly exhausted.

Uninsured & Supplemental Underinsured Motorist Limits

The third type of coverage that is important to understand is your UM/SUM coverage. UM coverage protects you if you’re injured by an uninsured vehicle. Your SUM coverage protects you if you’re injured by an underinsured vehicle meaning your injuries entitle you to more compensation then the policy limits of the offending vehicle. The two coverages work essentially the same. In each instance, your insurance company will step in the shoes of the at-fault party and pay you for damages you suffered as a result of that at-fault party’s negligence. The claim can either be settled or arbitrated, if a settlement cannot be reached. I always recommend that you carry UM/SUM limits equal to your BI limits. I can say from experience, that this coverage is necessary. I have represented countless people that have been injured by uninsured/underinsured drivers and have needed this coverage.

When you are shopping for insurance make sure to compare each policy based upon the amounts of coverages you are getting. If you were shopping for a particular model of a car, you’d want to make sure when comparing prices from different dealers that each car was equipped with the same options. It is the same for picking insurance, you will want to make sure each policy has the same coverage limits.

About the Author

Steven Palermo is the managing partner for Palermo Law, Long Island’s Personal Injury Law Firm. He has been helping people receive compensation for their injuries for over 21 years. He focuses on cases involving car accidents, truck accidents, construction accidents and slip and fall injuries.

His book The Ultimate Guide to Handling New York Car Accident Claims details the ins and outs of a car accident claim in a simple, easy-to-read manner.