Supplementary uninsured/underinsured motorist bill sent to Cuomo
December 6, 2012
Legislation (A.10784/S.7787) resulting from the well-known and highly publicized case of Fisher v. Progressive, which spawned the new focus on SUM coverage and the proposed statutory amendment to Section 3420(f)(2) of New York Insurance Law, finally has been delivered to Gov. Andrew Cuomo after being passed by both houses of the Legislature back in June. Gov. Cuomo has until Dec. 17 to act on the proposal. Members wishing to express their opinions about this bill may contact the governor's office by phone (518) 474-8390 or by email.
There has been talk of a chapter amendment to remove the automatic link of SUM and BIL coverage amounts, so the outcome of the proposal remains uncertain. PIANY has been in contact with the sponsor with regard to any additional obligations on the part of agents and brokers, and supported the original SUM bill as introduced.
As currently drafted, the bill would change the required amount of supplementary uninsured/underinsured motorist coverage from a maximum amount that is the same as bodily injury to a minimum amount that is the same as bodily injury. In addition, this bill would automatically require the purchase of SUM coverage but also give the insured the option decline SUM coverage or to purchase lower amounts than the statutory minimum. The insurer or agent would be required to disclose to the insured what SUM coverage is and how much the insured may purchase.
New York's uninsured motorist, underinsured motorist, and supplementary uninsured motorist protection scheme developed out of a need to protect the innocent victims of motor vehicle accidents caused by "financially irresponsible motorists," i.e., those who either have no insurance, or who carry an amount of insurance that is less than the amount carried by the claimant, and thus cannot be counted on to make their victims whole. The purpose of such coverage has been regarded as "social and economic."
Earlier laws regarding motor vehicle financial responsibility and compulsory insurance served as an incentive to procure insurance, but did not protect the innocent victim. A source of recovery was made available to the innocent victim with the enactment of legislation in 1959 that created the Motor Vehicle Accident Indemnification Corporation and mandated the inclusion of an uninsured motorist endorsement in all automobile liability policies. In 1977, the legislative policy of protecting motorists and providing victims with a means of obtaining compensation for their injuries was extended to situations in which the tortfeasor, although not uninsured, was nevertheless inadequately insured by the creation of "supplementary uninsured" or "underinsured" motorist coverage.
The uninsured motorist statutes attempt to place the injured person in the same position as a person in an accident caused by an identifiable motor vehicle covered by a standard automobile liability policy with the statutorily prescribed limits of liability in effect at the time of the accident. The same basic policy of minimizing losses and placing the victim in the position "he should have been in" also underlies the SUM provisions. The purpose of supplementary uninsured or underinsured motorist coverage is to allow insureds, at their own option, to obtain the same level of protection for themselves and their passengers as they purchased to protect themselves against liability to others.
"The Auto Insurance Case That Blew Up on the Internet," as it was called in a New York Times article, started out as a claim to recover damages for the wrongful death of a 24-year-old woman named Kaitlyn Fisher as a result of an intersection collision in Baltimore, Md., on June 19, 2010. There was some dispute about which driver had the traffic signal in their favor. The decedent, Fisher, had an auto policy issued by Progressive, with a bodily injury liability limit of $100,000 per person. That policy also provided SUM coverage in the same amount. The other vehicle involved in the accident was insured by Nationwide, with bodily injury liability limits in the minimum allowable amount of $25,000 per person. Thus, by definition, the other vehicle was underinsured as to Fisher.
Upon presentation of liability claims against Fisher brought by three other individuals injured in the accident–her passenger and the driver and passenger of the other vehicle–Progressive promptly settled those claims within its bodily injury liability coverage limits in order to protect its insured's estate. At around the same time, Fisher's estate asserted a liability claim against the other driver, as well as a claim against her own insurer, Progressive, for SUM benefits. Pursuant to the terms of the SUM policy, in the event that the estate were to recover the full amount of the other vehicle's liability coverage, i.e., $25,000, it would be entitled to recover an additional $75,000 in SUM benefits if it were established that the other vehicle was liable (negligent), and that its damages warranted such additional recovery–a showing that would not be very difficult in the context of a death case. While Nationwide promptly offered its full $25,000 in settlement of the claim against its insured, Progressive refused to pay its $75,000 SUM coverage, based upon its assessment that the other vehicle, the underinsured vehicle, was not at fault for the accident.
Unable to settle the SUM claim with Progressive, the estate chose to sue the driver and owner of the other vehicle in court in order to determine the issue of fault for the accident. Progressive then chose to intervene in that action, and thus became a party. As reported in the Times article, during the course of the trial, Progressive's lawyer sat alongside and assisted the other driver's lawyer in attempting to establish the absence of fault (liability) of that driver–i.e., that the accident was the fault of Fisher. Notwithstanding those efforts, the jury returned a verdict in favor of Fisher's estate, finding that she was not at all liable for the accident.
It was Progressive's lawyer attempting to blame Fisher for her own death that motivated her very angry brother to take to the Internet to blast Progressive in an Aug. 13, 2012 Tumblr posting, provocatively titled, "My Sister Paid Progressive Insurance to Defend Her Killer in Court."