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Despite being required for every car driver to drive in New York, auto insurance is often a mysterious, murky topic that drivers do not understand. It can be difficult to understand even a personal insurance policy on your own if you only review it upon renewal. However, it is key that consumers understand their own insurance policies, as these policies will determine what compensation you will receive in the event of an accident.

What’s in a Car Insurance Policy?

Auto policies will include multiple types of coverage, instead of being limited to a single one. This is because the various types of coverage are meant to cover different forms of damage, whether to the policyowner or to someone injured by the policyowner. Typically, they are divided between first-party coverage, which will compensate the policyowner after an accident, and third-party coverage, which will compensate those injured by the policyowner’s negligence who decide to sue.

Because New York is a no-fault state, all auto insurance policies must include what is known as first-party personal injury protection (PIP) benefits. These benefits will compensate the policyholder and anyone else covered under the policy for bodily injuries suffered as a result of an accident, regardless of who is at fault.

The following list details the required types of coverage and minimum amounts that auto insurance policies must include to be legal in New York:

• Bodily Injury Liability Coverage: This covers compensating victims of the driver’s negligence in the event of an accident. At minimum, policies must provide $25,000 for injuries and $50,000 for death of a person involved in an accident. Additionally, it must provide $50,000 for injuries and $100,000 for death of two or more persons involved in an accident.
• Property Damage Coverage: This covers the costs of compensating the owners of property damaged in an accident. At minimum, $10,000 must be provided to cover property damage in a single accident.
• Personal Injury Protection: As previously mentioned, these benefits are used to compensate the policyholder and their dependents for injuries sustained in an accident, regardless of fault. At minimum, $50,000 must be provided by an insurance policy in order to cover what is known as basic economic loss. Read more.
• Uninsured/Underinsured Motorist (UM/UIM) Coverage: This coverage protects the policyholder if they are injured by an uninsured/underinsured driver or in a hit-and-run accident. It provides up to $25,000 per person and $50,000 per accident at minimum to cover economic losses such as medical expenses in excess of PIP benefits, and non-economic losses such as pain and suffering. Read more.

Additionally, there are optional types of coverage that consumers may purchase from their insurer. Some are required by law to be offered by every insurer while others are optional.

• Additional PIP (APIP) Benefits: Consumers are able to buy additional PIP coverage that will raise the amount of PIP benefits they receive in an accident. The initial increase will bring your PIP coverage to $100,000, and further increments are typically offered in amounts of $50,000. It will also extend coverage of PIP benefits to include out-of-state guest occupants in your vehicle and allow PIP benefits to be payable for any accident which occurs in the United States, its territories and possessions, and Canada.
• Optional Basic Economic Loss (OBEL): Insurers are required to offer this coverage as an option for policyholders. It will increase the amount of basic economic loss covered by PIP benefits by $25,000, to $75,000. However, there are downsides to this coverage because the law will then treat $75,000 as the new threshold to meet in order to sue a liable person for economic loss.
• Supplementary Uninsured/Underinsured Motorists (SUM) Coverage: This optional coverage will increase the amount of compensation you can possibly receive in an accident with an uninsured or underinsured driver. At minimum, it will increase your coverage to $250,000 per person in an accident and to $500,000 per accident total, though insurers often offer higher amounts at a higher premium.
• Collision Coverage: This type of coverage is effectively PIP benefits for damage to your car in an accident. Regardless of fault, they will pay up to the stated policy limit for damage done to your vehicle (and objects within it) as a result of a collision with another vehicle or if your car turns over.
• Comprehensive Coverage: This type of coverage is effectively PIP benefits for your car in anything besides an accident. Theft, vandalism, animal collision, falling objects, and acts of God such as wildfires and floods will all invoke this coverage and allow you to receive compensation from your insurer. It’ll even provide you with transportation expenses in the event of your vehicle’s theft or destruction, usually until your insurer settles your claim on the matter.
• Medical Payments Coverage: This coverage will cover, without regard to fault, for the medical and funeral expenses that you and your passengers suffer in the event of an accident with your car, up to the policy limit.
• Accidental Death and Dismemberment (AD&D) Coverage: This is additional coverage in case of an accidental death or dismemberment when you, your family members, or other guests are in your car. It is paid in addition to all of the other forms of coverage that would pay out in this circumstance, such as PIP, liability, and Medical Payments Coverage.
• Supplemental Spousal Liability Insurance: Many liability provisions will not apply in cases where it is your spouse who has suffered an injury as a result of negligence on the part of your vehicle’s driver. However, by purchasing this provision, you are able to apply your liability coverage to your spouse as well. Insurers are required to offer this form of coverage, though you may have to specifically ask for it if they do not offer it at no charge.

Each type of coverage will have a policy limit, which is the maximum amount the policy will pay for a specific type of claim. It is usually set on a per person and per accident basis, meaning that it will pay at most a certain amount per person in an accident and a capped total amount for an entire accident, regardless of how many are injured. A policy will not pay beyond the policy limit, as it is the maximum coverage that has been purchased.

For instance, if a policyholder purchases a basic policy with bodily injury coverage set at the minimum, then the maximum amount it will pay out in an accident is $25,000 per person, capped at $50,000 total for the whole accident. Once they reach those amounts per person and for an entire accident, then they will typically be responsible for all further expenses out of pocket. For instance, if an accident causes $75,000 in bodily injuries, then the liable driver’s bodily injury coverage will only cover up to $50,000, leaving them to cover the final $25,000 on their own.

The final piece of an auto insurance policy in New York is the serious injury threshold, which limits the right of the insured to sue in the event of an accident. This is because of the no-fault law that New York has adopted, which also mandated the PIP benefits that are required in all policies.

The serious injury threshold is meant to ensure that New York’s courts are not overwhelmed with smaller claims that would be better served through PIP benefits being paid to victims. A victim may not sue a liable party unless expenses have either exceeded the threshold of $50,000 or $75,000 in basic economic losses as set by PIP benefits or OBEL coverage, or have suffered what is considered a serious injury. A serious injury is typically something along the lines of death, disfigurement, or loss of a limb.

Personal Injury Protection Benefits?

For most auto accidents, personal injury protection benefits, otherwise known as first-party or PIP benefits, are the primary compensators for a victim’s injuries. This is regardless of fault in the accident. These benefits thus act as a form of first-party, no-fault coverage.

PIP benefits are designed to be payable in any situation where the insured and their dependents are injured as a result of a car accident.

Note that the victim does not need to be in their insured car when the accident occurs. Under NY Ins L § 5103, victims who are covered by a policy are entitled to PIP benefits in any accident which arose out of the use or operation of a motor vehicle. This can include a variety of situations such as when one is riding a bus or is struck by a vehicle while on a bike or walking.

One key exception is when the victim is an operator or passenger of a motorcycle. The law explicitly states that those who are occupants of a motorcycle during an accident are not entitled to PIP benefits even if they may have an auto policy covering their car. 

Such was the case in Boyson v, Kwasowsky, in which the plaintiff was a passenger on a motorcycle driven by her husband when he had to swerve to avoid a truck. This motion caused both of them to fall off the motorcycle, and when the motorcycle hit the truck and went airborne, it landed on top of the plaintiff. While the accident involved a truck and might have allowed PIP benefits otherwise, the defendant’s motorcycle usage at the time meant that PIP benefits could not be paid under New York’s no-fault laws.

You should be aware that PIP benefits will not cover all types of expenses that may arise out of an accident. PIP benefits are only allowed to cover what New York calls economic losses. Economic losses include medical expenses, lost wages, rehabilitation costs, and similar costs that have a tangible presence and effect on one’s finances. 

Non-economic losses are not covered by PIP benefits.

These costs would include pain and suffering, loss of enjoyment of life, and similar things that might occur as a result of an accident’s impact on a victim. They have an intangible quality that can only be measured in a subjective manner, and cannot be handled through payment of PIP benefits. A victim would need to sue a liable party for compensation in order to have them covered.

Bodily Injury Liability Coverage

Bodily injury liability provides coverage for a driver in the event that their negligence causes an accident that injures another person.

It is a form of third-party coverage, meant to reimburse those who are not the insured. Unlike PIP benefits, they can cover non-economic losses such as pain and suffering.

Generally, this coverage will apply in one of two types of situations. First, the injured party, such as a pedestrian or out-of-state driver, does not have PIP benefits to cover them as they lack a New York insurance policy that includes those benefits. Second, the expenses sustained exceeded what could be covered by a victim’s PIP benefits, whether due to the dollar amount or due to the expenses included non-economic losses which are by design not covered by PIP.

Purchasing a higher policy limit benefits both the insured and the victims in this case. For the policyholder, it helps to ensure that regardless of how serious an accident is, they will be able to use their insurance coverage to provide adequate compensation to those injured by their negligence. On the other hand, victims who have won cases or arrived at settlements with an insured liable party can rely on this bodily injury liability coverage to compensate them as soon as possible.

Uninsured/Underinsured Motorist Coverage

In cases where a victim was injured either by an uninsured or underinsured driver or by a hit-and-run driver, uninsured/underinsured motorist (UM/UIM) coverage provides compensation to a driver.

Technically, these are two separate types of coverage (UM and UIM), but in New York policies, the required amounts are rolled together and used to cover both types of situations. 

Uninsured motorist coverage is normally used to handle cases where a driver lacks any insurance or where a driver has fled the scene of the accident and cannot be found. In such cases, a victim would be unable to receive the compensation normally paid by a liable party’s bodily injury liability coverage. 

Underinsured motorist coverage also fills the gap between a liable party’s bodily liability coverage and the required compensation. It pays out the remaining compensation due to the insured victim up to the policy limit, and the insurer will be able to seek reimbursement from the liable party afterwards. 

New York mandates that UM/UIM coverage types be included in every auto policy. As they are meant to replace bodily injury liability coverage, they will cover non-economic losses as well as economic losses. 

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Frequently Asked Questions

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Who Should I Contact if I’ve been Injured in a Car Accident?

If you or a loved one has been injured in a car accident and you need assistance in understanding what you can collect from your auto insurance policy, contact Rosenblum Law for a free consultation today. Call 888-815-3649 or email us today.