Uninsured Motorist Coverage/Supplemental Underinsured Motorist Coverage
A. When and How It Applies:
1. Uninsured Motorist Coverage (UM) – Insurance Law Section 3420(f)(1) – is mandatory in New York State which makes certain that the minimum bodily insurance coverage mandated by law is available to those involved in an accident with an uninsured vehicle.
2. Under Insured Motorist Coverage (technically called supplementary uninsured/under insured motorist coverage or SUM) – Insurance Law Section 3420(f)(2) – is optional coverage which provides an insured person up to the level of coverage that was purchased over the minimum.
3. Difference between UM and SUM coverage:UM – An “uninsured vehicle” includes a vehicle that is not covered by an insurance policy and it includes vehicles for which neither the owner nor the driver can be identified (including hit and run driver).SUM – An “under insured” vehicle normally means that the amount of insurance on the other vehicle is less than that on the insured’s vehicle. However, it can also mean that, due to payments made under that policy, the amount of coverage remaining is less than the coverage on the insured vehicle or the insurer on the other vehicle denies coverage or becomes insolvent – these are not the typical scenarios.
Rafellini v. State Farm, 9 N.Y.3rd 196 (Ct. App. 2007). The importance of this case cannot be overstated. Originally, in this case, the Second Department held that the No-Fault “serious injury” threshold does not apply to Underinsurance claims (SUM) although it did apply to Uninsured Motorist claims (UM). The Court of Appeals reversed and held that a claimant applying for SUM benefits would be subject to the No-Fault “serious injury” threshold and the defendant insurer could raise this as a defense to a SUM claim. Thus, any claimant applying for UM or SUM coverage must have a “serious injury” within the meaning of the No-Fault law and the legion of case law in that area.