Required Auto Insurance

Coverages

This section describes the minimum coverages and amounts of insurance that must be purchased to satisfy the financial responsibility requirements needed to register your car and obtain license plates. These coverages include:

(1) No-Fault (Personal Injury Protection) - to pay medical expenses and lost earnings for a driver or passenger injured in, or a pedestrian injured by, your car;

(2) Liability - to protect against the harm any car you drive, with the owner’s permission, might do to other people and their property; and

(3) Uninsured Motorists - to protect against the injuries you, your family or your passengers might suffer in a hit-and-run accident or in an accident with an uninsured vehicle.

1. No-Fault Benefits---Personal Injury Protections(PIP)

No-Fault, also called Personal Injury Protection (PIP), is designed to pay promptly regardless of who might have been at fault or whether there was any negligence—for actual economic losses (meaning medical expenses, lost earnings, and other reasonable and necessary expenses related to injuries sustained), up to $50,000 per person ("basic No-Fault coverage"), to a driver or passenger injured in your car and to pedestrians injured by your car, because of its use or operation.

 The purpose of No-Fault insurance is to restore individuals hurt in auto accidents to health and productivity as swiftly as possible. Because of New York’s No-Fault law, lawsuits due to auto accidents can be brought only for economic losses that exceed No-Fault benefits and for non-economic damages (such as pain and suffering) only if a "serious injury" (as defined in the Insurance Law) is sustained.

No-Fault is a personal injury coverage and does not pay for auto body repair of your car or damage to any other party’s motor vehicle or real or personal property. No-Fault is also primary to health insurance, which means it pays first in the event injury is due to an auto accident.

Under this coverage, your insurer pays you and relatives living with you for economic losses arising from injuries sustained in motor vehicle accidents anywhere within the United States, its territories and possessions, or Canada. It also covers any passengers injured in accidents in New York State while in your vehicle, as well as any guest passengers who are New York State residents injured in your vehicle anywhere in the United States, its territories and possessions, or Canada, if they are not covered under another auto insurance policy in New York State.

Pedestrians injured by motor vehicles in the State are also protected by No-Fault.

Basic No-Fault auto insurance coverage includes:

• necessary medical and rehabilitation expenses (in accordance with established fee schedules);

• 80% of lost earnings from work, up to a maximum payment of $2,000 per month for up to three years;

• up to $25 a day, for up to a year from the date of the accident, to reimburse other reasonable and necessary expenses resulting from the auto accident; and

• a $2,000 death benefit (in addition to the $50,000 basic No-Fault limit), payable to the estate of a person eligible for No-Fault benefits but killed in a motor vehicle accident.

However, under most insurance policies, a person will be ineligible for No-Fault benefits, if:

• driving while intoxicated or impaired by use of a drug that contributes to the accident;

• intentionally causing his or her own injuries;

• riding an all terrain vehicle (ATV) or a motorcycle (as operator or passenger);

• injured while committing a felony;

• injured while in a vehicle known to be stolen; or an owner of an uninsured vehicle.

2. Liability Insurance—Bodily Injury & Property Damage

This liability coverage protects you (and anyone driving your car with your permission), if a claim is made against you by another person ("third-party"), alleging that you were negligent or otherwise at fault. Thus this coverage will make payments on your behalf to that injured third-party, in the event your car is involved in an accident that results in serious injury or death to others or damage to their property.

In addition, your insurance company must provide you with a legal defense against such claims, without reducing your policy’s liability limits.

The minimum limits of third-party bodily injury liability coverage mandated by New York’s Vehicle and Traffic Law are:

$25,000 for bodily injury (not resulting in death), or $50,000 for any injury resulting in death, sustained by any one person in any one accident;

$50,000 for bodily injury (not resulting in death) sustained by two or more persons in any one accident, or $100,000 for any injuries resulting in death sustained by two or more persons in any one accident (subject to the above per person limits).

Since the minimum limit of coverage required by law for property damage liability protection, for damage to another party’s car or property, is $10,000 per accident, these minimum liability limits in New York are sometimes together referred to as "$25,000/$50,000/$10,000" or "25/50/10".

If you are injured in an auto accident, or your car is damaged, due to someone else’s negligence, you may be able to make a claim against that other person’s auto insurance policy for bodily injury and property damage liability. You must establish that the other party was at fault. You have a right to sue another party involved in the auto accident for pain and suffering, only if you sustained a "serious injury" as defined in the Insurance Law. You can also go to court against a third party for property damage and, when bodily injury has been sustained, for other economic loss not covered by, or exceeding the limits of, your No-Fault coverage.

Suing another party would be your own personal action, and does not involve your insurance company under the provisions of your policy. If you decide to sue someone else, your insurer under your own policy is not required to provide or pay for a lawyer you might want or need to handle your claim against another party.

While your automobile liability insurance policy provides coverage for every passenger in your vehicle injured in an accident caused by the driver’s negligence, it will most likely not provide any liability coverage when the injured passenger is your spouse unless you purchase Supplemental Spousal Liability Insurance, which is discussed on page nine. However, your spouse would still be eligible for basic No-Fault coverage as discussed earlier. When shopping for insurance, please check with your insurance company, agent or broker about whether your policy affords bodily injury liability coverage to your spouse.

3. Uninsured Motorists Coverage

Another important feature of your auto insurance policy is bodily injury protection for you, your family members who live with you, and occupants of your car, in the event you or they are injured as the result of negligent actions by an uninsured vehicle or hit-and-run motorist. This mandatory coverage applies only in regard to bodily injury due to accidents occurring in New York State, and does not cover auto body damage to your car or damage to other property.

For New York accidents, the amount of uninsured motorists protection required to be provided is the same minimum bodily injury limits as required for liability insurance. For a small charge, this uninsured motorists coverage can be extended to out-of-state accidents by endorsement, so you should check with your agent, broker or insurer if you want this extension of coverage.

If anyone in your car is injured by the driver of an uninsured vehicle or a hit-and-run motorist, a claim should be filed with your auto insurance company under this coverage. Similarly, you should file a claim with your automobile insurer if you or a member of your family are injured while unknowingly occupying an uninsured vehicle, or injured as a pedestrian by an uninsured or hit-and-run motorist. If you do not own a car, but a relative in your household does, you may file a claim under that policy.

If you think you’re not covered by your own policy or by a family member’s policy in your household, and if you are injured as a pedestrian by an uninsured vehicle or hit-and-run driver or as an occupant of an uninsured vehicle in New York State, you may still be eligible for uninsured motorist protection, to the extent of basic No-Fault coverage and minimum limits for bodily injury liability. You or your representative should immediately report the accident to proper authorities, and then promptly (because there are stringent time limits) file a claim with the Motor Vehicle Accident Indemnification Corporation (MVAIC), located at 110 William Street, New York, New York 10038 (Tel: 212-791-1280) (Fax: 212-791-2574).

B. Insurance Information and Enforcement System (IIES)

You should be aware of the importance of maintaining required motor vehicle insurance coverage on a continuous basis as long as you own a car. The New York Department of Motor Vehicles (DMV) has the Insurance Information and Enforcement System (IIES), that will detect uninsured vehicles.

Insurers are required to report to the DMV information, such as cancellations, renewals, and issuance of new policies, on all persons they insure for motor vehicle insurance. This information is entered into an electronic database that will continuously track insurance coverage for each registered vehicle. Failure to maintain liability insurance coverage for your car at all times can result in the suspension of your vehicle registration and driver’s license, as well as other substantial penalties.

These procedures could result in you receiving a letter from the DMV inquiring about your insurance status – even if your vehicle is currently insured. Please don’t delay in handling any correspondence of this nature you receive from the DMV, even if you are confident that your insurance is in effect. You may contact your insurance agent, broker or company for assistance in responding to these letters, or you may contact the DMV directly at 518-474-0700 and follow the phone prompts for information on how to handle such correspondence.

C. When You Rent A Car

 Car rental agreements vary from rental company to rental company. But as a matter of financial responsibility, all companies must provide whatever coverages are required by law. Rental companies may sell a collision damage waiver (CDW), also known as "Optional Vehicle Protection" (OVP) to those who do not reside in New York and New Yorkers who are not insured under a private passenger automobile insurance policy. For rentals of 30 consecutive days or less, rental car companies in New York State can sell OVP, or, if not purchased, charge a renter for the total value of stolen (lost) or damaged private passenger type vehicles. The daily cost of the OVP may be as high as $12, depending on the value of the vehicle. If you currently have a New York auto insurance policy and you rent a car for 30 days or less anywhere in the United States, its territories and possessions, or Canada, regardless of whether you have collision or comprehensive coverage on your own car, you do not need to buy a CDW from the rental car company. Such coverage is currently provided without any extra charge. However, in the future, an auto insurer may elect to charge for this coverage and you would then have the option of rejecting this coverage. If you do not purchase this coverage from your auto insurer, the rental car company could hold you liable for any damage to the rental vehicle. You may, therefore, wish to consider purchasing it from the rental car company when you rent a car.

Many credit card companies provide some type of "collision damage coverage" to their cardholders for vehicles they rent with that card. This is separate from any other coverage and usually covers losses only in excess of amounts collectible under other existing coverages. It should be noted that credit card companies do not extend this coverage to all vehicles. You may wish to check with your credit card company to verify exactly what protection it provides and what types of vehicles are covered. Coverage under these agreements are regulated under the New York State Insurance Law and must be underwritten by a licensed New York State insurer.

In addition, some rental companies offer higher liability limits than the required 25/50/10 at an additional cost. You may want to purchase this additional coverage if you do not own your own car. If you already have a policy with higher liability limits, it will provide the coverage while renting a car. Some rental car companies are also licensed to sell additional accident and health coverage (beyond required No-Fault benefits) and coverage for personal items stolen from the vehicle. These coverages are also regulated under the New York State Insurance Law and must be underwritten by a licensed New York State insurer.

Reprinted from New York State's Consumer Guide to Automobile Insurance.