Most of us don’t spend time studying the advantageous print in our auto insurance policies, but should you live in New York State, take an in depth look: Your premium can have risen — or will soon — since you were routinely enrolled in latest coverage you could not even need.
A state law that went into effect on Aug. 1 requires auto insurers so as to add a latest line of coverage — supplemental spousal liability insurance — for all drivers, even those that are single or are buying coverage for a business.
Policyholders can opt out of the coverage, so long as they accomplish that in writing — something singles should do immediately. Opting out may additionally make sense for a lot of businesses.
But an issue stays: With the fee of auto insurance already on the rise, what do married people stand to realize?
All drivers and passengers, including spouses, have already got access to “no-fault” coverage in New York, which pays as much as $50,000 for medical care and wage loss, no matter who was at fault in an accident, insurance experts said.
But if a driver caused an accident and the driving force’s spouse was seriously injured — and had expenses above those limits, including pain and suffering — the supplemental spousal liability coverage would allow the injured spouse to hunt a much bigger payout. He or she would want to file a lawsuit to prove that the driving spouse was culpable.
“The spousal supplemental coverage allows a spouse to sue the opposite spouse to access this liability coverage, along with no-fault advantages,” said Paul Tetrault, senior director, personal lines and counsel, for the American Property Casualty Insurance Association, a trade organization for insurers.
The idea of suing your individual spouse is unusual, and insurance experts said they hadn’t heard of this case’s arising often. But proponents of the change, who include personal injury lawyers, say policyholders are sometimes surprised to learn their spouses aren’t covered.
Before the brand new law took effect, policyholders could request, or opt into, the coverage.
The cost varies, depending on several aspects, but will generally run about 5 percent of the bodily injury premium, based on the New York State Department of Financial Services, or roughly $20 to $84 annually. (This reporter noticed that her premium routinely rose greater than $100.) It generally covers as much as the policy’s existing bodily injury liability limits.
“The passengers can all the time bring a lawsuit against the driving force — in the event that they cause an accident that causes them injury,” said Mike Jaffe, a partner and private injury lawyer with Pazer, Epstein, Jaffe & Fein. “But within the case of married couples, coverage often doesn’t exist.”
“It is a bizarre quirk,” added Mr. Jaffe, who can also be a former president of the New York State Trial Lawyers Association, a trade group that has lobbied for the law. “This law goals to correct that. It is a low-cost coverage for something that’s somewhat rare.”
The New York Trial Association, which spent $1.3 million on lobbying efforts in New York state government last yr, has supported the law change for at the very least a decade.
The insurance industry, nonetheless, didn’t support the law. Ellen Melchionni, president of the New York Insurance Association, a trade group, said the industry believed that “opt-out mechanisms will not be consumer friendly and are sure to guide to greater confusion.”
New York is an outlier — most states should not have a statute mandating this coverage, based on the American Property Casualty Insurance Association. But it might be possible to sue one’s spouse and recuperate damages in other states, a spokesman said.
“The mandate to supply coverage to all policyholders unless they refuse the coverage in writing is just not common in other states,” he said. “This reinforces the importance of consumers talking with their insurance firms or agents to be sure that their policy coverages fit their needs.”
The change took effect on Aug. 1 for brand spanking new policies, renewals and any form of modifications to existing policies. The New York Department of Financial Services has a declination form on its website, but your insurer should send you a form that permits you to decline the coverage.
A spokesman for State Senator Neil Breslin, a Democrat and the bill’s most up-to-date sponsor, said the Legislature was examining whether it should narrow the law in the approaching legislative session. It sunsets on July 31, 2027.
“We actually don’t want people to pay for coverage that may provide them zero profit under any circumstances,” the spokesman added.
If consumers are unable to opt out of the coverage even after contacting their insurer, they’ll file a criticism with the Department of Financial Services.