Underinsured Motorist Coverage in New York Car Accidents: What You Need to Know

When a car accident leaves you with serious injuries, one of the most frustrating discoveries is that the at-fault driver’s insurance policy is not large enough to cover your losses. Medical bills, lost wages, and the cost of living with a permanent injury can quickly exceed what another driver’s liability coverage will pay. This is where underinsured motorist coverage — and New York’s unique SUM framework — becomes critical.

Uninsured vs. Underinsured Motorist Coverage: What Is the Difference?

These two types of coverage are often confused, but they address different situations.

Uninsured motorist (UM) coverage applies when the driver who caused your accident has no liability insurance at all — or when you are the victim of a hit-and-run driver who cannot be identified. In those situations, your own UM coverage steps in to compensate you for damages the at-fault driver’s policy would otherwise have paid.

Underinsured motorist (UIM) coverage applies when the at-fault driver does have insurance, but their policy limits are too low to fully compensate you. If a driver with a $25,000 policy causes you $200,000 in harm, UIM coverage can bridge the gap between what the at-fault driver’s carrier pays and the damages you actually suffered.

In many states these coverages are sold separately. New York takes a different approach.

New York’s SUM Coverage: A Combined UM/UIM System

New York Insurance Law requires auto insurers to offer what is called Supplementary Uninsured/Underinsured Motorist (SUM) coverage. SUM is a single combined coverage that handles both uninsured and underinsured motorist scenarios under one policy provision.

When you buy an auto policy in New York, the insurer is required to offer SUM coverage in an amount equal to your liability limits. You can choose to purchase less, but the insurer must make the full amount available. Many drivers unknowingly purchase lower SUM limits to save on premiums — and discover too late that the coverage gap is enormous.

SUM coverage follows the vehicle and the named insured. It can protect you whether you are driving your own car, riding as a passenger in someone else’s vehicle, or even hit as a pedestrian by an underinsured driver.

Why New York’s Minimum Liability Limits Are Often Insufficient

New York’s mandatory minimum liability coverage is $25,000 per person and $50,000 per accident for bodily injury. These limits were set decades ago and have not kept pace with the actual cost of medical care.

Consider what serious injuries actually cost:

A single overnight stay in a hospital can exceed $5,000. A cervical spine surgery with hardware costs $50,000 to $150,000 or more. Years of physical therapy, pain management injections, and follow-up imaging easily add tens of thousands of dollars more. Then there is lost income — if you work with your hands or are unable to return to your prior occupation, the wage loss alone can dwarf the minimum liability limits.

When the driver who hit you carries only $25,000 in coverage, that amount may be exhausted within days of your hospital admission. SUM coverage exists precisely to prevent that coverage ceiling from becoming the ceiling on your recovery.

How SUM Coverage Triggers in New York

SUM coverage does not activate the moment an accident happens. Specific conditions must be satisfied before your SUM carrier becomes obligated to pay:

First, the at-fault driver’s liability coverage must be fully exhausted. You generally cannot make a SUM claim while the at-fault driver’s carrier still has unresolved exposure. The liability insurer must either pay its full policy limits or deny the claim before SUM activates.

Second, your total damages must exceed the at-fault driver’s liability limits. If you suffered $30,000 in damages and the at-fault driver has a $25,000 policy, SUM is theoretically available — but only for the $5,000 gap. SUM becomes meaningful when the gap is substantial.

Third, your SUM limits must be higher than the at-fault driver’s liability limits. If the at-fault driver has a $100,000 policy and your SUM limit is only $50,000, SUM will not apply — you can only collect SUM coverage if your limit exceeds the tortfeasor’s limit.

Written Notice Requirements and the 90-Day Rule

New York’s SUM endorsement imposes strict notice requirements that many injured people miss, sometimes forfeiting coverage entirely.

Under the standard SUM endorsement, you must give your insurer written notice of a potential SUM claim as soon as practicable after you learn that the at-fault driver’s coverage may be insufficient. This is a separate and independent notice from the initial no-fault claim.

More critically, New York Insurance Law Section 3420(f)(2) and the standard SUM endorsement require that before you accept a settlement from the at-fault driver’s liability carrier and release that driver, you must give your SUM carrier written notice and an opportunity to advance the liability settlement amount. Most policies require this notice within 90 days of learning about a potential SUM claim.

If you settle with the at-fault driver’s liability carrier and release that driver without first notifying your SUM carrier and giving it a chance to respond, you may permanently lose your SUM rights. Insurance companies have successfully used this defense to deny SUM claims where the insured failed to follow the proper sequence.

The practical lesson: as soon as you suspect the at-fault driver is underinsured relative to your injuries, contact your own insurer and an attorney immediately — before any settlement is negotiated.

Arbitration vs. Lawsuit for SUM Claims in New York

SUM claims in New York are not handled as conventional lawsuits against the at-fault driver. Instead, they proceed through a specific legal process.

The standard New York SUM endorsement requires disputes to be resolved through arbitration, not litigation in civil court. The American Arbitration Association (AAA) typically administers these proceedings under rules specifically designed for insurance disputes. Each side presents evidence, including medical records and expert testimony, and a neutral arbitrator issues a binding decision.

Arbitration is generally faster than a jury trial and avoids the uncertainty of a jury verdict. However, it also has limits: appellate rights are narrower in arbitration, and the process can still take a year or more for complex cases.

In some circumstances — particularly when coverage disputes arise about whether SUM applies at all — litigation in court may be necessary before or alongside the arbitration. An attorney experienced in SUM claims will navigate which forum applies to your specific situation.

Damages Recoverable Under SUM Coverage

SUM coverage compensates you for the same categories of damages you would seek from the at-fault driver in a personal injury lawsuit. These include:

Medical expenses. Past and future medical bills, including surgery, hospitalization, rehabilitation, physical therapy, and ongoing pain management. Future medical costs are established through expert testimony about your expected care needs.

Lost wages and lost earning capacity. If your injuries prevented you from working — or permanently reduced your ability to earn — you can recover those losses. For serious injuries, a vocational expert and economist may be needed to calculate the full present value of future income loss.

Pain and suffering. New York allows recovery for physical pain, emotional distress, loss of enjoyment of life, and the impact of your injuries on your daily activities and relationships. There is no formula; the amount depends on the severity, permanence, and disruption caused by your injuries.

Other economic losses. Out-of-pocket expenses not covered by no-fault, transportation costs, home modifications, and similar losses may also be recoverable depending on the facts.

Because New York is a no-fault state, your initial medical bills and a portion of lost wages are covered through your no-fault (PIP) benefits regardless of fault. SUM picks up what no-fault does not cover and what the at-fault driver’s policy cannot pay.

Practical Tips for Protecting Your SUM Rights

Purchase SUM coverage equal to your liability limits. New York law requires insurers to offer this option, and insurers are required to obtain a written rejection if you choose less. Upgrading your SUM coverage is typically not expensive and can mean the difference between full compensation and a recovery limited by someone else’s poor insurance choices.

Give timely written notice. As soon as you know — or reasonably should know — that the at-fault driver’s coverage is insufficient for your injuries, notify your insurer in writing. Do not wait for the liability case to fully resolve. Use certified mail and keep a copy.

Do not release the at-fault driver without notifying your SUM carrier. The premature release rule is one of the most common traps in SUM litigation. Always consult an attorney before signing any release.

Document all injuries and treatment. Thorough medical records are the foundation of any SUM claim. Attend every appointment, follow your doctors’ recommendations, and make sure your treating providers document your symptoms and limitations in detail.

Preserve evidence of the at-fault driver’s insurance. Obtain a certified copy of the at-fault driver’s declarations page showing their liability limits. This is the foundational document that establishes whether SUM coverage applies.

Understand the stacking rules. New York does not permit stacking of SUM coverage across multiple vehicles on the same policy for the same accident, but there are nuances depending on how the policy is written. An attorney can review your policy to identify all available coverage.

Working With a Long Island Car Accident Attorney on SUM Claims

SUM claims involve procedural requirements and deadlines that are easy to miss and difficult to recover from. The notice requirements, the arbitration process, the interaction between no-fault benefits and SUM damages, and the sequencing of liability settlement before SUM activation all require careful management.

If you were seriously injured in a Long Island car accident and the at-fault driver’s insurance does not fully cover your losses, you may have a SUM claim worth pursuing. An attorney can evaluate the at-fault driver’s coverage, review your own policy, send timely written notice to your SUM carrier, and guide the claim through arbitration.

For more information about car accident claims on Long Island — including how no-fault benefits interact with your right to sue, how settlement value is calculated, and what to expect at every stage of the process — visit our Long Island car accident lawyer resource page.