A significant percentage of drivers in New York carry only the minimum $25,000 per person in bodily injury liability coverage. Some carry no insurance at all. In either situation, the injured person faces a recovery problem: the at-fault driver’s policy is inadequate to compensate for a serious injury, or there is no policy at all. New York’s uninsured motorist and supplemental underinsured motorist coverages are designed to address exactly this scenario. Your own insurance policy pays when the at-fault driver’s does not.
This is one of the most important concepts in New York auto insurance, and it is one of the most commonly misunderstood. UM and SUM coverage is not paid for by the at-fault driver’s insurance company. It is paid for by your own insurance company — the same company that covers your car. It is triggered when the at-fault driver’s coverage is inadequate. It is, in effect, insurance that you purchased to protect yourself from the inadequacy of the other driver’s coverage.
Uninsured motorist coverage
UM coverage applies when the at-fault driver has no insurance, when the at-fault driver’s insurance has denied coverage for the claim, or in hit-and-run cases where the at-fault driver cannot be identified. The coverage responds up to the UM policy limits to compensate for injuries the at-fault driver’s policy would have covered. In New York, UM coverage is mandatory on every automobile insurance policy at a minimum of $25,000 per person and $50,000 per accident. Policyholders can purchase higher limits.
Hit-and-run cases are a particularly common use of UM coverage. If a driver hits you and flees the scene without providing identification, you may never know who they were and you cannot collect from their insurance. Your own UM coverage responds as if the unknown driver had been insured at the UM limit. The recovery is capped at the UM limit, but it is the recovery that would otherwise be unavailable.
Supplemental underinsured motorist (SUM) coverage
SUM coverage applies when the at-fault driver has insurance but the policy limits are inadequate to compensate for the plaintiff’s damages. If the at-fault driver carries $25,000 in liability and the plaintiff’s damages exceed that amount, SUM coverage responds for the difference up to the SUM policy limit. If the plaintiff’s SUM limit is $250,000, the total available recovery is $250,000 — $25,000 from the at-fault driver’s policy and up to $225,000 from the SUM carrier.
The SUM carrier’s position is that it is stepping into the shoes of the at-fault driver. The SUM carrier evaluates the claim the way the at-fault carrier would have — reviewing the liability evidence, reviewing the medical evidence, potentially arguing threshold issues and comparative negligence. SUM claims are in many ways no different from claims against the at-fault driver’s carrier, except that the carrier is the plaintiff’s own insurance company. This creates a specific dynamic: the policyholder who has paid premiums for years is now across the table from their own carrier in an adversarial posture.
Why SUM coverage is critical in New York
New York’s minimum bodily injury liability coverage is $25,000 per person and $50,000 per accident. Many drivers carry only these minimums. A serious injury case easily produces damages that exceed $25,000 — the medical costs alone for a surgical spine case can exceed that amount. Without SUM coverage, the plaintiff’s recovery is capped at the at-fault driver’s limit regardless of how severe the injuries are or how strong the liability case is. The plaintiff’s attorney cannot get blood from a stone. If the at-fault driver has only $25,000 in coverage and no personal assets worth pursuing, $25,000 is the recovery.
SUM coverage prevents this outcome. A policyholder with a $250,000 SUM limit has access to $250,000 in recovery even if the at-fault driver has only the minimum coverage. A policyholder with a $500,000 or $1,000,000 SUM limit has access to that much coverage. SUM is the most cost-effective insurance coverage available. SUM coverage at $100,000 over the minimum limits can be purchased for a modest annual premium — often less than a few dollars a week — compared to the hundreds of thousands of dollars in potential recovery it provides in a serious accident.
SUM coverage is underutilized
Most policyholders do not know their SUM coverage exists, do not know what the limits are, and have never thought about whether the coverage is adequate. When purchasing auto insurance, the focus tends to be on liability limits — what the policy will pay to someone the policyholder injures. SUM coverage is a separate line item that many policyholders accept at the minimum without realizing it is the coverage that protects them personally if another driver injures them. Reviewing your own policy and purchasing SUM coverage at the highest limits you can afford is one of the most valuable insurance decisions you can make.
The practical test: if you are injured by a driver who has only the New York minimum $25,000 in coverage, what is your SUM coverage? If you do not know, pull out your policy or call your agent. If your SUM limit is the same as your liability limit, you likely have adequate protection. If your SUM limit is the minimum, consider increasing it. The additional premium is small. The additional protection is substantial.
Policy deadlines and procedural requirements
UM and SUM claims are governed by the terms of the plaintiff’s own insurance policy, not by a general statute. Many policies require that a demand for arbitration be filed within specific timeframes. Some policies require notice of the UM/SUM claim to be given to the carrier within a reasonable time after the accident. Others require that any tentative settlement with the underinsured driver be disclosed to the SUM carrier before it is finalized, to preserve the SUM carrier’s subrogation rights.
Missing a policy-imposed deadline can bar the UM/SUM claim just as completely as missing a statutory deadline. The SUM carrier’s position is that if its rights have been prejudiced by the claimant’s failure to comply with policy terms, the SUM claim is barred. The policy terms vary by carrier. Reviewing them early in the case and complying with each requirement protects the SUM claim.
Stacking and household policies
In some cases, multiple policies in the same household can stack to provide additional SUM coverage. The policy terms govern whether stacking is available, and New York law imposes some limitations. But in cases where a household has multiple vehicles insured under separate policies, or where a household member has a SUM policy on a different vehicle that may cover the injured person as a resident relative, reviewing every available household policy can identify additional coverage. Identifying every applicable SUM policy is an essential step in the coverage analysis in any case where the at-fault driver’s coverage appears inadequate.
Arbitration of UM and SUM claims
Most UM and SUM policies in New York require disputes to be resolved through arbitration rather than litigation. The policyholder files a demand for arbitration, the American Arbitration Association administers the proceeding, and an arbitrator — typically a neutral attorney with experience in personal injury claims — hears the evidence and issues an award. The arbitration proceeds more quickly than a lawsuit. Discovery is limited. The hearing is typically completed in one to two days.
Arbitration awards are generally final and binding. Limited grounds exist for challenging an award in court, but those grounds are narrow — arbitrator misconduct, manifest disregard of the law, or an award that exceeds the scope of what the arbitrator was authorized to decide. For most purposes, the arbitration award is the end of the case. Understanding that the SUM claim will likely be resolved through arbitration rather than a jury trial affects how the case is prepared and how evidence is presented. The arbitrator, not a jury, is the audience.
The relationship between UM, SUM, and no-fault
UM and SUM coverage operate separately from no-fault PIP benefits. PIP pays for medical expenses and lost wages up to the $50,000 basic limit regardless of fault. UM and SUM pay for damages beyond what PIP covers — the excess medical expenses, the wage loss beyond the PIP cap, pain and suffering, and future damages — when the at-fault driver’s coverage is unavailable or inadequate. A single accident typically produces claims under multiple coverages in parallel.
Coordination among the coverages requires attention. The PIP carrier has a right of intercompany loss transfer against the at-fault driver’s carrier in some cases. The SUM carrier has subrogation rights against the at-fault driver for amounts the SUM carrier pays. The plaintiff’s attorney must preserve the SUM carrier’s subrogation rights by giving proper notice before accepting a tentative settlement with the at-fault driver. Failing to preserve these rights can bar the SUM claim even when the injuries clearly exceed the at-fault driver’s limits.
How Schwartzapfel Holbrook approaches UM and SUM claims
At Schwartzapfel Holbrook, we review every applicable insurance policy in every case. That review includes the at-fault driver’s liability coverage, the policy covering the vehicle the injured person occupied, the injured person’s own automobile policy including UM and SUM coverages, household policies, and any employer or commercial policies that may apply. We identify policy-imposed deadlines early and comply with every procedural requirement. When SUM coverage is the only meaningful source of recovery, we build the SUM claim with the same preparation as a claim against an outside defendant — because the carrier will defend it with the same rigor. The fact that the carrier is your own insurance company does not change the analysis. It changes only the relationship.
Schwartzapfel Holbrook / Fighting For You