In order to register your car and obtain license plates in New York you must either purchase an automobile liability insurance policy from an insurer licensed by the New York State Insurance Department, or provide other acceptable proof of financial responsibility in at least the minimum amounts required by law. However, you may purchase higher amounts of the required coverages as well as other insurance coverages in order to meet your particular needs. This Guide is designed to give you a better understanding of auto insurance and practical information about available auto insurance policies.

REQUIRED AUTO INSURANCE

A. 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 your car, or 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 Protection (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 economic losses (meaning medical/health expenses, lost earnings, and other reasonable and necessary expenses related to injuries sustained), up to $50,000 per person (“basic No-Fault coverage”), to the driver and all passengers injured in your car as well as any pedestrians injured by your car, because of its use or operation in New York State.

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 provides you, as well as all relatives living in your household, with protection against economic losses arising from injuries sustained in motor vehicle accidents anywhere within the United States, its territories and possessions, or Canada. It also provides coverage for 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. All pedestrians injured by motor vehicles in the State are also protected by No-Fault.

Basic No-Fault auto insurance coverage includes:

• reasonable and necessary accident related 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 from the date of the accident;
• up to $25 a day, for up to a year from the date of the accident, to reimburse other reasonable and necessary expenses, (e.g., household help, and transportation expenses to/from medical treatment) 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 (a pedestrian struck by a motorcycle or ATV is covered);
• 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: 646-205-7800) (Fax: 212-732-1826). Additional information about MVAIC can be found at http://www.mvaic.com.

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 monetary 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 is 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.

OPTIONAL AUTO INSURANCE

Beyond the coverages required by law, most insurance companies offer a wide range of optional auto insurance coverages at additional cost. The most popular and valuable options are discussed here.

A. Bodily Injury Liability

Buying increased bodily injury liability limits is a good idea for consumers seeking to protect their assets in case of a lawsuit resulting from an auto accident. If you have assets that you wish to protect, you should seriously consider purchasing higher limits of bodily injury liability coverage -- $50,000/$100,000, $100,000/$300,000, $250,000/$500,000 or even higher. Some insurers offer policies with a combined single overall limit for both bodily injury liability and property damage liability, rather than separate limits, which would then pay up to a single maximum amount for all damages caused by one accident regardless of how many persons are injured (e.g., $100,000, $300,000 or $500,000).

B. Property Damage Liability

Although the requirement for third party property damage liability coverage is currently $10,000, many cars today are worth far more. Given the high cost of automobile replacement and/or repair, the purchase of property damage liability limits higher than the required minimum limit of $10,000 should be considered by insureds. Property damage limits of $15,000, $25,000, $50,000 and higher are generally available for an additional premium.

C. Additional PIP (No-Fault) Benefits

It is often smart to buy more No-Fault protection, over the basic $50,000 level of No-Fault benefits required by law. Because of No-Fault's cost-effective design, extended No-Fault benefits represent a relatively inexpensive option.

For a modest additional premium, optional coverages are available that will pay more than the required basic No-Fault benefits, explained in Chapter II. Consumers now have two choices:

• You may purchase Additional PIP coverage, to raise the limit of No-Fault benefits available in case of an accident up to $100,000 or higher and, in the process, increase the potential maximum amounts of lost earnings payments, other necessary expenses or the death benefit, depending on the limit you select. Additional PIP also includes coverage for you and your family and, unlike basic No-Fault, extends to all out-of-state guest occupants in your car when driving anywhere in the United States, its territories and possessions, or Canada. For a minimal charge, you may also purchase additional personal injury protection solely to cover such guest occupants, without increasing the limit of No-Fault benefits.
• Insurers must offer Optional Basic Economic Loss (OBEL) coverage. If purchased, this coverage elevates the required $50,000 of basic economic loss coverage by an additional $25,000. When the basic limit of $50,000 has been reached on a claim, this $25,000 can be designated by the injured person to be applied specifically to payments for loss of earnings from work (wage loss), for rehabilitation, or to all elements of basic economic loss.

Neither of these two additional No-Fault coverage options lengthens the three-year limit within which wage loss benefits are payable.

The availability of these No-Fault options makes optional medical payments coverage (see below) no longer as important as it had been, because that coverage (except for funeral expenses) responds only if No-Fault does not cover the situation or after No-Fault benefits, when applicable, are first exhausted.

D. Supplementary Uninsured/Underinsured Motorists (SUM) Coverage

As discussed in Chapter II, one of the basic coverages that comes with your policy is bodily injury protection against the negligent actions of an uninsured or hit-and-run motorist. You have the option to expand this basic protection. For an additional premium, you can purchase Supplementary Uninsured/Underinsured Motorists (SUM) coverage of up to $250,000 per person per accident and $500,000 per accident, subject to the per person limit ($250,000/$500,000). Many insurers offer higher limits of SUM coverage. SUM coverage also covers accidents occurring out-of-state, which are not covered under the basic required Uninsured Motorists Coverage. However, the amount of SUM coverage may not exceed the bodily injury liability limits of your policy. If you have an accident with another vehicle that is insured but has bodily injury liability limits lower than yours, or if such vehicle has no insurance at all, SUM coverage will be activated if it has been purchased. The amounts paid under SUM by your policy up to its SUM limits will be reduced, or offset, by any amounts recovered from another party's auto insurance liability policy. Thus, if you are ever involved in an accident with other drivers, you can be sure your family is protected at least to the amount of SUM coverage you have purchased from your own insurer.

E. Collision Coverage

With this optional insurance, your own insurer pays you, without regard to fault, for damage to your car caused by a collision with another car or any other object or your car overturning. If you do not have collision coverage, and your car is damaged in an accident where the other party is at least partially at fault, you may still recover all or part of the damages to your vehicle by making a claim against that other vehicle's property damage liability insurance coverage for the proportion of damages for which the other driver was at fault.

F. Comprehensive Coverage

Under comprehensive coverage, your insurer pays you, without regard to fault, for damage to your car from all causes, other than collision, such as theft (of the car itself or its parts), fire, flood, windstorm, glass breakage, vandalism, hitting or being hit by an animal, or by falling or flying objects. If your car is stolen comprehensive coverage will also provide a certain amount per day specified in your policy for transportation expenses (rental car, public transportation, etc.). Generally, this coverage is provided until the time the company makes an offer to settle your claim.

Comprehensive and collision deductible options generally offered are $100, $200 (standard), $250, $500 and $1,000. Coverage may also be sold where the deductible does not apply to window glass damage. Remember, generally, you will not be paid more than the actual cash value of your car (i.e., what the car is worth) at the time of an accident, which takes depreciation into account. Some insurers also offer “replacement coverage” which will pay the cost to replace a vehicle with a brand new vehicle of the same make and model. This coverage usually applies in limited circumstances, for example, only up to 1-year after the car is purchased.

G. Medical Payments Coverage

This insurance pays, without regard to fault, medical expenses and funeral expenses for you and persons riding with you, if an accident occurs involving your car, up to its stated limits.

H. Accidental Death and Dismemberment (AD&D) Coverage

Some insurers offer coverage that will pay you, your family members, or other occupants of your car, under the terms of the policy, a set amount for certain serious injuries or death caused by an accident while in your car. These AD&D amounts are payable in addition to any amounts collected under the No-Fault, liability, or other parts of the policy.

I. Gap Coverage

Under the terms of a loan or lease on an automobile, at the time of total loss, there is often a difference between the amount your insurer will pay as actual cash value (under comprehensive or collision coverage) and the amount which you owe to the entity that financed or leased the vehicle (such as a bank or auto dealer). This difference, which can be hundreds or even thousands of dollars, is called the “gap amount”. Gap coverage pays this amount in the event of a total loss.

There are two different forms of gap insurance. You can purchase a “waiver” of the gap amount directly from the lender or dealer, who in turn has purchased gap insurance to cover the vehicle. While the law also allows the alternative of purchasing a separate policy or an endorsement to your personal automobile policy to cover this gap amount, no insurers are currently making this second type of gap coverage available. Please note that in the past few years, some lenders and leasing companies have changed the language of their financing contracts to state that the amount of settlement by the physical damage insurer (based on actual cash value) will be accepted as full satisfaction of the contract in the case of total loss to the vehicle. In these cases, neither a gap waiver nor policy is necessary, as no “gap” exists.

J. Supplemental Spousal Liability Insurance

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. However, insurers are required to offer their policyholders the opportunity to purchase supplemental spousal liability coverage. This insurance covers the liability of an insured because of the death of or injury to his or her spouse for the liability insurance limits provided under the policy. You must request this additional coverage from your insurer and pay an additional premium for it unless your company is providing this coverage at no charge.

When you initially purchase insurance or at your policy renewal, your insurance company will be sending you notice of the availability of this coverage, an explanation of it and the additional premium that will be charged for it. Even if you do not purchase this optional coverage, a spouse is still eligible for Nofault benefits as discussed earlier.

K. Other Coverages

Other optional coverages available from some companies are Towing and Labor Coverage, Extended Transportation Coverage (Rental Reimbursement) and Mechanical Breakdown Coverage. You should contact your insurer, agent or broker to discuss whether it would be advisable for you to purchase them. Some additional coverage may only be offered when comprehensive and/or collision coverage is purchased on the insured vehicle.