Car Accident Law 102: Auto Insurance in NY

People usually have one thing in mind when shopping for a motor vehicle insurance policy: price. Insuring a motor vehicle, especially in New York City, can be very expensive. Price, not policy limits, usually becomes the primary concern. However, it is crucial that you understand your insurance policy, because a few dollars can determine whether you are adequately covered.

Below are the major things to understand about your insurance policy:

  • Bodily Injury (BI): Bodily injury is the amount the insurance company will pay for physical injuries sustained by other people as a result of the insured’s liability. In New York State, the minimum BI coverage is $25,000. There is an issue with having such a limited policy. If a lawsuit is commenced against the insured, the case goes to trial, and the verdict exceeds $25,000, the insured will be personally liable for the amount exceeding $25,000. For example, John has a $25,000 in BI insurance, and rear ends Stephanie’s vehicle. Stephanie sustains a fracture as a result of the accident, and sues John. The jury verdict is $100,000. John’s insurance company will pay $25,000, and John will be responsible for $75,000.
  • No-Fault (NF): New York State is a “No-Fault” state, meaning that the auto insurance company will pay up to $50,000 in medical benefits after an accident, regardless of who caused the accident.

Although individuals can negotiate for higher benefits, the majority of policies in New York State carry the $50,000 minimum.

  • Property Damage (PD): Generally, this is the amount that the insurance company will pay for property damage caused to other vehicles as a result of the insured liability.
  • Uninsured Motorist (UM): This category can be vital, but is usually overlooked. UM coverage comes into play when a person is involved in an accident caused by an individual with no insurance policy, or an unidentified individual. This is common in hit and run accidents, as well as accidents involving stolen vehicles. In New York State, the minimum UM policy is $25,000.