What You Risk by Not Purchasing Underinsurance Coverage on Your Auto Policy

Many clients who suffer serious injuries from a motor vehicle accident are unable to obtain adequate compensation for their injuries because of two reasons, 1) the negligent driver who caused the accident only had a $25,000 insurance policy and no significant assets and 2) the injured person failed to take out underinsured motorist protection on their auto policy.  While you cannot control the actions of the negligent driver, you can control what insurance coverage you provide for you and your family.

What is Underinsured motorist coverage?

When you take out an auto insurance policy, you have a choice to add underinsurance motorist coverage, and the choose the amount.  This auto coverage adds additional insurance coverage in the event a negligent driver’s own insurance coverage is not adequate to fairly compensate you for your injuries.

For example, if a negligent driver hits your vehicle while stopped at a traffic light, causing you to suffer serious injuries resulting in surgery, but the defendant driver only had a $25,000 insurance policy and no other coverage, you would not be able to recover more than that amount from the insurance carrier.  However, if you had taken out $250,000 underinsurance coverage, you would be able to settle with the negligent driver for the $25,000, and then have a claim against  your own insurance company for an additional $225,000 ($250,000 minus $25,000 equals $225,000).

While it is true that you can always take the case to verdict instead, the insurance policy coverage of the defendant will remain the same.  For example, if a jury comes back with a $250,000 verdict after a trial the insurance company would still only pay their $25,000 policy.  A balance of $225,000 for the verdict remains and you now will have a piece of paper called a “judgment” for that amount.  But how does that translate to actual money?  A collections attorney would now need to be hired to try and collect those monies from the defendant through either garnishing wages or forcing the sale of assets.  This is a very lengthy process and the defendant may choose to file for bankruptcy complicating the matter as well.

Unfortunately, the costs of the litigation for the jury trial required paying your doctors to testify which significantly reduced the amount of the $25,000 settlement proceeds, possible preventing any recovery for the injured person.  This is a reality for many accident victims, which can be easily avoided by purchasing underinsurance coverage, which I highly recommend to all drivers as soon as possible. The yearly additional cost to the overall premium is usually very reasonable, and the benefits well worth the coverage.

What is uninsured motorist coverage?

If a negligent driver causes an accident, but leaves the scene and cannot be identified, or failed to have auto insurance coverage, you may still recover for your injuries in a claim against your own insurance company with uninsured motorist coverage.  For example, if the uninsured motorist coverage for your policy is only $25,000, then that will be the limit of the coverage for such an accident.  The higher the uninsured motorist coverage, the more you are protected in the event of such an accident.  Both uninsured and underinsured coverage are usually sold together as one package and amount, but you should check with your insurance company with all the available options and costs.

Brett J. Nomberg

I am a personal injury trial lawyer who has been successfully litigating bus, truck, and auto accidents for over 25 years in New York State, and the former Chairman of the NYC Bar Committee, Tort Division.  I have taken multiple million-dollar verdicts and won numerous appeals.  My partner Steven Rosenbaum litigates Workers Compensation cases for those injured on the job, as well as Social Security Disability matters. We each provide free consultations, and there is no fee unless we win.