New York Legislation Makes SUM Coverage Standard

New legislation in the form of S7787/A10784 has been passed, and could affect insurance rates negatively for drivers. New York is currently one of the no-fault states when it comes to auto insurance, and insurance fraud remains a big problem.

This new law will make an optional form of coverage in the form of supplementary uninsured/underinsured motorist, or SUM, a staple of every policy. The caveat is that policyholders have the choice to opt-out. So, unless otherwise stated, SUM coverage will come as a standard part of any policy.

What is SUM Coverage?

Uninsured/Underinsured motorist coverage, (UM/UIM), covers the policyholder up to a certain limit for damages sustained by a driver that either doesn’t have insurance or doesn’t have enough insurance.

What supplementary uninsured/underinsured motorist coverage does for the policyholder is it increases the level of current UM/UIM limits. Limits, according to the New York Dept. of Financial Services, can be raised up to $250,000 per person to a maximum of $500,000 per accident. Although, some insurers offer limits higher than this. In addition to this, SUM coverage can also cover policyholders for accidents that occur in another state.

While this is a useful coverage option for any policyholder, many feel that making it a standard part of a policy, as opposed to an opt-in choice, will raise rates. If you would like to learn more about how you can save on your auto insurance premium, or about new laws concerning your state, please visit us here.

Calling for a Veto

According to U.S. Politics Today, the New York Insurance Association (NYIA) has asked that Governor Cuomo veto this legislation, on the grounds that it will raise car insurance rates. Statistics show that New York’s no-fault insurance system has cost drivers a whopping $385 million in 2010. The state’s auto insurance rates are so high partly because of the widespread no-fault insurance fraud that goes on.

NYIA President, Ellen Melchionni stated, “It was crucial that the legislature act this year to enact no-fault auto insurance reform. The legislature failed to pass meaningful reform that would stop the rampant fraud in the system. Instead legislators passed a bill that will negatively impact consumers and likely result in the state’s drivers paying more for their auto insurance.”

While fraud goes unchecked, New York drivers will pay higher rates for their auto insurance.


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