SUM Coverage Is Offset By Recovery From Tortfeasor.

• Author: Rogak, Lawrence N.

New York's Appellate Division, Second Department, cleared up a question which apparently needed clarification: when an injured party receives a SUM award from an arbitrator, that award gets offset by whatever recovery the claimant made from the tortfeasor. In Matter of Merchant v State Farm Ins. Company, 2020 NY Slip Op 01917 (Decided on March 18, 2020) petitioner commenced a proceeding to modify an arbitration award in the amount of $5,000 on her claim for supplemental uninsured/underinsured motorist (SUM) benefits, alleging that the arbitrator erred in offsetting the amount of damages sustained by $25,000, the amount she recovered from the insurance company which covered the other vehicle involved in the automobile accident. State Farm cross-petitioned to confirm the award. Supreme Court confirmed the award and the Appellate Division affirmed.

"Contrary to the petitioners contention, the arbitrator did not err in offsetting the amount of damages sustained by the amount received from the insurance company which covered the other vehicle involved in the accident. The purpose of SUM coverage is to provide the insured with the same level of protection he or she would provide to others were the injured a tortfeasor in a bodily injury accident. SUM coverage does not function as a stand-alone policy to fully compensate the insured for his or her injuries.

Comment: The SUM endorsement on your auto insurance policy is...