WILL YOUR INTERESTS BE PROTECTED IF YOU GET INTO A SERIOUS CAR ACCIDENT? The Mysteries of SUM/UM Explained.

Shhhhhhh!! I know it’s a dirty little secret, but you’ll be happy to learn that almost everyone is guilty of it. When was the last time you actually reviewed or paid attention to your motor vehicle insurance coverage? Do you really know or understand what your policy provides for in the event of an accident? If you’re like most people, I suspect the answers to those respective questions are rarely, if ever, and nope, not really. About the only thing that most drivers care about is making sure they have the necessary insurance coverage to ensure their right to operate their motor vehicle (at least as mandated by the State of New York).

If ever an accident were to occur in which you were seriously injured at the hands of a driver who either didn’t have any insurance coverage or minimal policy limits, your own interests could be seriously jeopardized. It’s for this reason that I’m urging every one of you to grab the declarations page from your insurance policy and give it a quick perusal… go on… right now, go grab it…. Don’t worry, I’ll wait…

Now, assuming you’ve done your homework and have in fact reviewed your policy limits, I’ll draw your attention to a couple lines on your policy that you’ve probably never paid attention to or that you may not have fully understood. I’m referring to the coverage line pertaining to SUM/UM coverage. Although it may have a funny and acronym ridden name, this coverage line is second only to your liability limits in terms of importance in your policy.

As for what are they and what do they mean, SUM stands for Supplemental Underinsured Motorist coverage, while UM stands for Uninsured Motorist coverage. In New York State, drivers are required to carry a minimum of $25,000 in liability coverage for a single person and $50,000 in liability coverage for multiple claims. This is different than SUM/UM coverage. Liability coverage protects other individuals against your negligence in the event you cause an accident with resulting injuries. All in all, the statutory minimum $25,000/$50,000 policy is by all measures small potatoes and won’t provide much coverage. That’s where SUM/UM coverage come into play.

Heaven forbid it ever happens, but consider this. What happens if you’re involved in a serious or catastrophic motor vehicle accident caused solely by the negligence of another. Chances are pretty good that you or your family may be entitled to damages against the driver of the other vehicle. Now imagine that the driver of the other vehicle either has no coverage or only the statutory state minimum? What happens then, when that $25,000/$50,000 policy isn’t enough to make you or your family whole? Do you call it a day, and walk away once her policy gets tendered? Or do you try to chase down the negligent party for the damages you’ve suffered which exceed her policy limits?

Both are certainly viable options, but the issue of practicality often comes into play. From the standpoint of professional experience, I’ve often found that those who maintain only minimal policy limits likely won’t have assets sufficient to satisfy even a potential judgment. Is that an absolute statement or even a bar to chasing tortfeasors for their negligence? Of course not, but it is a warning that you should never rely on another party’s ability to make you whole.

With that lesson in mind, I turn back to the concepts of SUM and UM coverage. These, in essence, are policy riders intended to protect you and your household relatives against the unexpected exposure resulting from the negligence of others. Where a negligent driver either has no coverage or insufficient coverage to make an injured party’s damages whole, UM and SUM riders kick in to fill in the gaps, respectively. The riders work just as their names imply. SUM coverage applies to situations where a driver has insufficient coverage, while UM coverage applies to situations where the other driver has no coverage.

What’s important to understand about both SUM and UM riders is that you are buying coverage up to a particular dollar value, but that may not be the amount you get. Any coverage offered by a SUM/UM rider will first be offset by any amounts you receive from the other party’s insurance policy. Take for example the following hypothetical. Assume you are involved in an accident with an individual that only carries a $25,000 liability policy which fully pays out to you. Assume also that you carry a $100,000 SUM rider. The most you could ever hope to recover against your SUM rider is $75,000 because the $25,000 will get deducted against the total amount available under the rider.

The down side to the system is that you don’t get the full $100,000 on top of the $25,000 you received from the negligent driver’s carrier. The up side, however, is that your little bit of planning has provided you with an extra $75,000 in potential coverage to which you wouldn’t otherwise have had access.

At the end of the day, the moral to this story should be simple: risk exposure is everywhere, so do what you can to minimize it, especially if you have a family. In the world of motor vehicle accidents, the statistics suggest that a collision occurs about every 8 seconds in the United States. While the majority of these accidents are certainly minor, a portion of them will nonetheless result in serious injuries and death. If you ever fall into one of these latter categories, do you really want to bank on the other driver having adequate coverage to protect your interests? I suspect not.

On a final note, I would remind everyone that even if you have high liability limits on your policy, that doesn’t necessarily mean you have any or adequate SUM/UM coverage. It’s for this reason that I encourage everyone to review their insurance policies. Not only should you understand what your coverage limits are, you need to make sure that you have adequate limits in place to protect against the unknown. If you’re unsure, speak with your attorney or insurance agent to determine what makes sense for you.

GOD BLESS AMERICA! HAPPY INDEPENDENCE DAY!

While the Fourth of July is quintessentially known as a time for eating hotdogs and watching fireworks, today I call to mind the true meaning of the holiday and remind everyone of its fundamental importance to our Nation. It was 237 years ago today that 56 intrepid souls signed their names to the Declaration of Independence. In doing so, these men not only risked everything that they held dear in their lives for what they believed to be true and right by committing treason against the British Crown, but they inexorably changed the world forever. Our Nation is the benchmark by which freedom is measured across the World because of what these brave men sacrificed and created over 200 years ago.

I encourage everyone to celebrate today, but never forget. Never forget where we came from, and never lose track of where we’re going because what we and those of us before us have built is too important to lose. I offer the following message, originally given by Charles Province, as a reminder to hold our freedoms sacrosanct no matter the cost. Ours is a truly unique and wonderful society that has never seen its equal, and I dare say never will.

It is the Soldier, not the minister, who has given us freedom of religion.
It is the Soldier, not the reporter, who has given us freedom of the press.
It is the Soldier, not the poet, who has given us freedom of speech.
It is the Soldier, not the campus organizer, who has given us freedom to protest.
It is the Soldier, not the lawyer, who has given us the right to a fair trial.
It is the Soldier, not the politician, who has given us the right to vote.
It is the Soldier who salutes the flag,
Who serves beneath the flag,
And whose coffin is draped by the flag,
Who allows the protester to burn the flag.

CAN YOUR ESTATE AVOID THE TRIALS AND TRIBULATIONS OF INFIGHTING AFTER YOU PASS?

The time after someone passes away is supposed to be a period of mourning, acceptance and hopefully regrowth. I think it’s fairly safe to say, however, that we’ve all seen at one point or another circumstances following the loss of a loved one (whether yours or someone else’s) degrade into nothing more than a money grab. I don’t care if you’re the Brady Bunch or that prototypically dysfunctional family, money seems to have a way of bringing out the worst in people. When that happens, greed, shortsightedness and/or one’s own sense of entitlement often lead an individual to the precipice of challenging the contents of their loved one’s Will. Are there times when a will contest is a valid alternative? Certainly. At other times, however, it’s nothing more than an effort to get more “stuff” out of the estate of your loved one.

What, if anything, can be done to avoid this possibility? As someone planning his or her estate, you’re often in a unique position to know your family well enough to sense the possible danger signs that a Will contest following your passing could be on the horizon. Whether you see trouble brewing from the get go or whether you simply wish to avoid infighting as a possibility down the road, you do have some options going forward to minimize the chances of it occurring.

What if you could dissuade someone from filing a Will contest with nothing more than a few written words? Sound appealing or even too good to be true? While not for everyone, the inclusion of what’s known as a “No Contest Clause” or “Terrorem Clause” in your Will might have just that effect. At its most basic level, no contest clauses state in no uncertain terms that if anyone files a lawsuit challenging the validity of your estate plan, that person will receive nothing from the estate. Yep, you heard me right. If someone challenges the Will in the midst of a terrorem clause, that person is entirely cut off from taking anything from the estate.

Pretty powerful stuff, huh? Is it an absolute deterrent? Of course not, but it will almost certainly give anyone contemplating a challenge pause to reconsider before filing. At the end of the day, you are always free to challenge a Will, but where a terrorem clause is present, the challenger must be cognizant of the fact that he or she will receive nothing if that challenge is lost. While New York recognizes the enforceability of no contest clauses, not all states do, so be sure to consult with local counsel to determine whether terrorem clauses are a valid and appropriate option for you.

If we take a step back and look more generally at the grounds on which Wills are typically overturned once challenged, we would see that the capacity (or rather incapacity) of the testator is often key to the challenge. While not directly a deterrent for challenging a Will, I would offer the following as guidance to at least ensure your wishes are carried out if your Will ever is challenged. The lesson is this: start soon and revisit often.

What does that mean exactly? Simple. In order to successfully challenge a will, the opponent must demonstrate that the Will is not valid for at least one of any number of reasons. Those reasons include facts like the Will was executed under duress or the testator didn’t have the mental capacity to execute the Will. With those facts in mind, I would suggest that it is wise to undertake your estate plan as early as possible – when there’s no question about your capacity – to ensure that your wishes won’t be set aside. To that end, I would also suggest that any good estate plan needs to be revisited often. Estate plans are organic and need to be updated occasionally to reflect major (and minor) changes in one’s life. It’s all about making these changes when you have the ability to make informed decisions. If you do so, short of your estate plan violating some established public policy, your wishes will become manifest and your intentions will be given full effect.

I would offer testators one final strategy for avoiding familial strife once you pass. Another major reason that Wills are challenged is the element of surprise. If the beneficiaries of a Will learn about a decedent’s wishes only after death and those stated wishes are a shock to one or more beneficiaries, you unfortunately have the home-grown makings for a challenge. Individuals who feel slighted by a decedent or who simply don’t understand why their loved one did what he or she did, are prone to lash out – often times in the form of a Will challenge. Such being the case, a certain level of transparency in one’s estate is often times a good idea. I’m not suggesting that testators go into gory detail about their assets with their loved ones, but there is something to be said for discussing your estate plan so they understand your wishes in advance of your passing, not to mention your rationale for distributing your estate in the manner you’ve chosen. No strategy will entirely eliminate the possibility of a challenge, but depending on your particular circumstances, a modicum of transparency could well remove any surprises that might otherwise result in a contest.

Any strategy aimed at minimizing the likelihood of a Will contest should be discussed with counsel. Depending not only on your particular family situation but also on the applicable laws and public policies of your jurisdiction, the choice of strategy(ies) is critical. Always consult with an attorney about your particular circumstances to ensure you understand not only your options, but the possible ramifications of those options.