SUM Insurance Coverage - How Much is Enough?
A few weeks ago, my friend John increased his automobile insurance policy limits to $300,000. He recently bought some real estate and said that he cannot sleep now that he has attachable assets; he is constantly worrying what will happen if he seriously hurts someone in an accident. I asked if he also obtained corresponding SUM coverage, which stands for Supplemental Underinsured Motorist Coverage. When he said he did not think so, I told him not to throw away his sleeping pills.
When John purchased $300,000 worth of liability insurance, he protected his assets and ensured that a stranger will be compensated if John causes an accident. But what if John is seriously injured in an accident and the offending vehicle only carries the minimum required coverage of $25,000? How will John be compensated for his losses? How will he and his family replace his earnings if he cannot work? How will he pay for his medical expenses not otherwise covered?
For a nominal extra premium, John could have obtained SUM coverage equal to the $300,000 he purchased to compensate others for their injuries. Now if John is severely injured and cannot work, his own insurance company must make up the difference. In the case of a minimally insured vehicle, he will receive an additional $275,000. Additionally, SUM coverage applies to injuries sustained by John=s wife, children, and any family member who might reside with him, and it applies to these people in any vehicle they enter. It even applies to them as bicyclists and pedestrians.
In an increasing number of states, insurance carriers must provide SUM coverage in every policy. In New York, it remains an optional coverage. Yet it is absolutely necessary. Especially in New York City, where pedestrian knockdowns and accidents involving taxicabs are routine occurrences, foregoing this coverage is simply not an option.
