Articles from Proner & Proner

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Think You Are Covered?
Think Again!

By Mitchell Proner

A common mistake made by motorists is to assume that by purchasing the required limits, they are covered in an accident. However, after an accident occurs and medical or property bills skyrocket past your coverage limits, or your insurance company informs you that your accident isn't covered as you thought, you may discover too late the importance of purchasing additional coverage. As insurance premiums are often expensive, many consumers decline to add additional coverage. In fact, while insurance companies offer additional coverage they usually do not explain the options nor do they encourage you to purchase them.

When considering purchasing extra coverage, consider first increasing the limits of the three basic and required insurance types: Liability, No Fault, and Uninsured Motorists Coverage.

Purchasing increased bodily injury liability will protect your assets in case of a lawsuit resulting from an auto accident. As you may know, the requirement in NY State for third party property damage liability coverage is $10,000. However, the majority of cars on the road are worth much more than that, and the cost of auto repair or replacement can be very high. For this reason, you may wish to consider purchasing limits higher than the required amount to protect your assets. You may also want to speak with your insurer to determine exactly what is covered. For example, if you have a vintage car or special parts, make sure that it is insured as such or you will only receive the blue book value for the regular model.

The basic No Fault limit is required at $50,000 but because of its cost-effective design, it is often the most inexpensive choice out of the required coverage types to increase. You have two options if you choose to make an increase here. The first is that you can purchase additional No Fault (PIP) benefits, which raise the limits to $100,000 or higher and thereby increase the potential maximum amounts of lost earnings or other expenses, such as the death benefit, depending on the limit you select. The second option is to select the Optional Basic Economic Loss (OBEL) coverage which raises the required $50,000 basic economic loss coverage by $25,000.

Uninsured Motorists and hit-and-run motorists will almost always leave a motorist wishing he had higher coverage. You can purchase Supplemental Uninsured / Underinsured Motorists Coverage (SUM) that will protect you in case of an accident with a motorist who either has no insurance or not enough insurance. SUM also covers accidents occurring out of state, which are not covered under the basic required Uninsured Motorists Coverage. However, the amount of SUM may not exceed the bodily injury liability limits of your policy. Should you get into an accident with a vehicle who has limits which are lower than yours, SUM would be activated and you and your family would be protected up to the limits of your own coverage. This also holds true if the motorist who hit you has no insurance at all and you would still be covered up to your own SUM limits. It is suggested that you purchase as much SUM as you can afford to protect yourself. After considering increasing the limits of required coverage, you may want to consider other types of additional insurance that may be offered by your carrier. There are numerous types, and many of them are unknown to drivers. You can take a look below and see if any of these types might be useful to you; contact your carrier to see if they offer it.

• Collision Coverage:
  Under this coverage your insurer pays you, without regard to fault, for damage to your car caused by a collision with another car or object or if your car overturns.
• Comprehensive Coverage:
  Under this coverage your insurer pays you, without regard to fault, for damage to your car from all causes, other than collision, such as theft (of the car or its parts), fire, flood, windstorm, glass breakage, vandalism, hitting or being hit by an animal, or by falling or flying objects. If your car is stolen, it will also provide an amount of coverage for transportation expenses such as a rental car or public transportation costs, depending on the carrier. There are deductible options offered from $100 up to $1,000. Make sure you choose a deductible that you can afford. Usually, you will only be paid what your car is worth at the time which takes into account depreciation. However, some carriers offer the option of "replacement coverage" which will pay the cost to replace a vehicle with a brand new vehicle of the same make and model. You should note that this usually only applies in certain circumstances and may have a time limit.
• Medical Payments Coverage:
  Under this coverage your insurer pays, without regard to fault, medical expenses and funeral expenses for you and persons in your car if an accident occurs, up to the set limits. However, this type only responds after the No Fault Benefits have been exhausted and therefore is less important if you have previously chosen to raise your No Fault limits.
• Accidental Death and Dismemberment (AD&D) Coverage:
  Under this coverage your insurer pays you, your family members, or occupants of your car, a set amount for certain serious injuries or death. These amounts are payable in addition to the amounts collected under No Fault, Liability, or other parts of your policy.
• Gap Coverage:
  If your car is loaned or leased you may want to consider this option. In the case of a total loss of the car, there is often a difference between the amount which your insurer will pay as actual cash value and the amount which you owe to the entity that financed or leased the car. This difference, which can be substantial, is known as the Gap Amount. This coverage pays this amount in the event of a total loss. There are two different forms of Gap coverage. You can either purchase a "waiver" of the gap amount directly from the lenders who in turn have purchased Gap coverage to cover the vehicle, or you can buy a separate policy or add it to your current policy if your carrier offers it to cover the gap amount. However, before adding this coverage you should check with your lender, as many have recently changed their rules and now will accept the amount of the settlement by the insurer as full satisfaction of the contract. Should this be the case, you would no longer need to purchase any Gap Coverage.
• Spousal Liability Coverage:
  Interestingly, while your liability policy provides coverage for passengers in your vehicle, it will often not provide any coverage when the passenger is your spouse. Recently, insurers were required to offer this type of coverage to their policy holders. This type would cover your spouse in the case of injury or death for the liability limits of the policy. However, even if you do not purchase this coverage, your spouse is still eligible for No Fault Benefits.

Some insurers offer other types of coverage such as: Towing and Labor Coverage, Extended Transportation Coverage (Rental Reimbursement), and Mechanical Breakdown Coverage. You should contact your insurer to see if they offer any of these if you are interested.

Mitch Proner
Proner & Proner
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