2005-06-10 / Columnists

Notes On Consumer Affairs

By Assemblywoman Audrey Pheffer


Audrey PhefferAudrey Pheffer Car insurance is not something that most people think of very often, but a review of your policy might be a good idea. A review of your insurance policy can make sure you, your family, your car, your belongings, and your finances are adequately protected by making sure your coverages suit your needs. It can also save you money by ensuring that you receive all applicable discounts.

The first step in reviewing your policy is to understand the various coverage. Liability insurance covers the damages that you may cause to others in the event of an accident that has been determined to be your fault. Liability insurance covers you, members of your family, relatives who reside with you, and anyone to whom you have given permission to drive your vehicle. It also covers these individuals while driving another vehicle. There are two types of liability insurance: bodily injury liability and personal property liability.

Bodily injury liability covers bodily injuries to other persons in the event of an automobile accident. The first number listed in your policy denotes the maximum amount that the insurance company will pay for a single person’s injuries, and the second number denotes the maximum amount the company will pay in total for bodily injury claims. This coverage is mandatory in New York, and the minimum required coverage is $25,000 per person and $50,000 per accident. Property damage liability covers damages to another person’s personal property when damaged in a car accident.

This coverage is also required in New York, and the minimum coverage is $10,000 per accident.

Uninsured motorist coverage is also mandatory in New York, and it covers any bodily injuries sustained by you and your passengers if injured in an accident by an uninsured driver. This coverage only covers accidents that take place in New York, but many companies offer extensions. The minimum coverage required for uninsured motorist coverage is $25,000 per person and $50,000 per accident. Additionally, supplementary underinsured/uninsured motorist coverage, often referred to as “SUM coverage,” can be purchased. This can help to pay for the bodily injuries sustained by you and your passengers if the at-fault driver lacks bodily injury liability coverage or if their coverage is not sufficient to pay for the necessary medical expenses.

Personal injury protection, sometimes referred to as “PIP” or “no-fault coverage,” covers the actual economic losses of the driver and any occupants in your car or any pedestrians injured by your car, regardless of fault or negligence. Actual economic losses include medical bills, lost earnings, and other expenses related to the injury, up to $50,000 per person, which is the minimum amount required in New York.

Collision and comprehensive coverage are not required by law in New York, but banks require it when they hold a lien on a car because the owner borrowed money to purchase the car. Collision and comprehensive insurance cover physical damages to your vehicle. Both comprehensive and collision insurance are subject to a deductible, which is the amount that you agree to pay before the insurance company pays for the covered loss. If you chose a high deductible, your premiums will be lower, and if you chose a low deductible, your premiums will be higher. Be careful, however, that you chose a deductible that you will be able to pay.

Guaranteed auto protection, also know as GAP insurance is one type of coverage that is frequently over-looked. If you have a car loan, and your vehicle is totaled, the insurance company generally pays what is considered to be fair market value for your car. If the amount of your loan exceeds the current market value of your car, you will still be accountable for the difference between the loan and the amount that the insurance company will pay. GAP insurance covers this amount.

It is very important that you chose the coverage that best suit your needs. Many people opt for the minimum coverage in order to reduce costs, but doing so may make you vulnerable to a law suit if you are in an accident. For example, if you cause an accident that damages several vehicles and injures several people, it is unlikely that the minimum coverage would cover all of the expenses. You would likely be held liable for the uncovered damages.

You can also decrease your premiums by taking advantage of discounts. Most insurance companies offer discounts for clean driving records, good credit history, automobile safety features, and low mileage. You can also decrease your rate by taking a New York State approved accident prevention course. The reduction lasts for three years, and it can be reinstated if you retake the course. For information on the course, please visit the New York State Department of Motor Vehicle’s website at http://www.nydmv.state.ny.us/pirp.htm.

To learn more about automobile insurance, please consult your insurance agent, or visit the New York State Insurance Department’s website at http://www.ins.state.ny.us/auto0402.

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