Minimum Auto Insurance Requirements in Colorado

This is an aggregate limit. It must be divided among everyone injured in the collision.

Suppose a driver causes a crash that injures four people. Even though each injured person may theoretically have access to as much as $25,000, the insurance company will not be required to pay more than $50,000 in total under a minimum-limit policy.

The claimants may therefore be competing for a limited pool of insurance proceeds.

This frequently complicates accidents involving:

• Families traveling together
• Rideshare passengers
• Multivehicle collisions
• Commercial vans
• Pedestrians or cyclists struck together
• Crashes involving several seriously injured occupants
• Multi-car collisions

When combined losses greatly exceed the available insurance, resolving the claims requires careful analysis. The insurer may request documentation from every claimant before deciding how to distribute the policy limits. The parties may dispute the severity and value of different claims. A settlement involving one injured person could affect what remains available to everyone else.

An attorney evaluating a multiple-claimant accident should determine the applicable per-person limit, the total per-accident limit, the number of claimants, and whether additional insurance policies may apply.

Colorado’s Property Damage Minimum Is Also Limited

Colorado requires at least $15,000 in property damage liability coverage. That amount may be insufficient when a crash destroys a newer vehicle or damages several vehicles at once.

The cost of repairing modern automobiles has increased as vehicles have become more technologically complex. What appears to be ordinary bumper damage may involve cameras, parking sensors, radar equipment, lighting systems, or other components that must be replaced and recalibrated.

A driver who causes a chain-reaction collision could also be responsible for damage to several cars. The $15,000 limit would apply collectively to all covered property damage arising from that accident, rather than separately to every vehicle owner.

The available funds may need to address repair costs, towing, storage, diminished value, or the total loss of a vehicle. If the combined property losses exceed the policy limit, the responsible driver may remain personally exposed for the unpaid balance.

Drivers who own significant assets should consider whether minimum property damage coverage provides meaningful financial protection.

Minimum Insurance Can Put the At-Fault Driver’s Assets at Risk

Liability insurance is not only for the benefit of an injured claimant. It also protects the policyholder from the financial consequences of causing an accident.

When the value of a claim exceeds the available policy limits, the injured person may attempt to recover the unpaid damages from the responsible driver personally.

Potentially exposed assets and income may include:

• Bank accounts
• Nonexempt personal property
• Certain real estate interests
• Business interests
• Investment assets
• Future earnings

Whether a particular asset can be reached depends on the law, the driver’s financial circumstances, and the manner in which the asset is owned. Nevertheless, carrying only minimum liability insurance can create a substantial gap between the protection purchased and the liability created by a serious accident.

Consider a driver who causes a crash resulting in a traumatic brain injury. The injured person’s damages could be worth hundreds of thousands or even millions of dollars. A $25,000 liability policy would provide only a small portion of that amount.

Once the insurance limit is exhausted, the existence of the policy does not automatically eliminate the driver’s responsibility for the remaining damages.

Higher liability limits may help protect a driver’s property, savings, and future financial security. People with homes, businesses, investments, or substantial income may also want to discuss umbrella insurance with a qualified insurance professional.

What Happens When the Other Driver Has Too Little Insurance?

A person can make responsible insurance decisions and still be injured by someone who carries only the minimum coverage.

Underinsured motorist coverage, often called UIM coverage, is designed for that situation. It may provide benefits when the driver who caused the accident has liability insurance but not enough to compensate the injured person fully.

Suppose an injured motorist has a claim worth substantially more than $25,000. The at-fault driver carries only Colorado’s minimum bodily injury limit. The injured motorist may first pursue the at-fault driver’s liability coverage and then seek additional compensation through applicable underinsured motorist coverage.

The amount potentially available depends on the language and limits of the injured person’s own policy, along with the facts of the accident and the value of the claim.

UIM coverage may be particularly important when a collision causes:

• Spinal cord damage
• Traumatic brain injury
• Multiple fractures
• Permanent nerve damage
• Serious burns or scarring
• Long-term disability
• An inability to return to the same occupation
• The death of a family member

Without adequate UIM protection, an injured person may discover that the responsible driver’s limited policy is the primary source of recovery, even though the accident caused life-changing losses.

Protection From Uninsured Drivers

Uninsured motorist coverage, commonly abbreviated as UM coverage, may apply when the person who caused the crash has no liability insurance.

It may also become relevant in certain hit-and-run accidents when the responsible driver cannot be identified.

Being injured by an uninsured driver can create immediate uncertainty. The victim may have medical expenses, lost income, vehicle damage, and other losses without an obvious liability insurer from which to seek compensation.

Applicable UM coverage can provide an important source of recovery. However, these claims are not always simple merely because they involve the injured person’s own insurer.

The insurance company may investigate:

• Whether the other driver was legally responsible
• Whether the uninsured vehicle qualifies under the policy
• Whether the claimant complied with notice requirements
• Whether the injuries were caused by the crash
• Whether the medical treatment was necessary
• The amount of income actually lost
• The overall value of the damages

Your insurance carrier owes contractual obligations under the policy, but it may still dispute the value or scope of the claim. The fact that you have paid premiums does not guarantee that the insurer will automatically accept every requested benefit.

Do Not Assume UM and UIM Coverage Automatically Doubles the Recovery

Insurance calculations can be confusing. Drivers sometimes believe that carrying $25,000 in UM/UIM coverage means they will always receive an additional $25,000 after collecting the at-fault driver’s $25,000 limit.

That is not necessarily how the claim will work.

The amount recoverable depends on several issues, including:

• The limits shown in the applicable policies
• The proven value of the injured person’s damages
• The amount paid by the responsible driver’s insurer
• Whether multiple policies or vehicles are involved
• Policy exclusions and definitions
• Colorado insurance law
• The number of injured claimants

An insurance policy should be reviewed as a complete contract. A declarations page is useful, but it may not reveal every condition, limitation, endorsement, or exclusion affecting the claim.

A lawyer can request certified copies of the relevant policies and determine how the provisions may apply to the accident.

Health Insurance Does Not Replace Adequate Auto Coverage

Some drivers assume they do not need substantial UM/UIM or medical payments coverage because they already have health insurance.

Health insurance is valuable, but it does not replace automobile insurance.

A health plan may pay part of the cost of medical treatment, subject to deductibles, copayments, coinsurance, provider networks, authorization requirements, and coverage exclusions. It generally does not compensate an accident victim for every category of damage.

Health insurance typically does not pay for:

• Lost wages
• Reduced future earning ability
• Physical pain
• Emotional distress
• Loss of enjoyment of life
• Permanent impairment
• Damage to a vehicle
• Household services the injured person can no longer perform

A health insurer may also assert a reimbursement or subrogation interest in money recovered from an automobile claim. The existence and amount of any repayment obligation depend on the type of plan, the governing law, the policy language, and the circumstances of the recovery.

These issues should be examined before a settlement is finalized. Resolving medical liens and reimbursement claims can have a significant effect on how much compensation the injured person ultimately keeps.

Medical Payments Coverage May Provide Early Assistance

Medical payments coverage, frequently called MedPay, may help pay qualifying medical expenses after a crash regardless of who caused it.

MedPay can be useful because liability claims often take time to investigate and resolve. Medical providers, however, may expect payment while the case is still pending.

Depending on the policy, MedPay may assist with expenses such as:

• Ambulance services
• Emergency treatment
• Imaging and diagnostic testing
• Physician visits
• Physical therapy
• Chiropractic treatment
• Other accident-related medical care

MedPay is separate from bodily injury liability and UM/UIM coverage. Drivers should review both the amount purchased and the circumstances under which the benefits apply.

A policy containing only the smallest available MedPay limit may provide limited assistance after a hospitalization or prolonged course of treatment.

How Much Auto Insurance Should a Colorado Driver Purchase?

There is no single policy limit that is appropriate for every person.

The right amount of insurance depends on the driver’s assets, income, family needs, tolerance for risk, vehicle use, and budget. A person who owns a home or business may have different concerns than someone with few assets. A household with several young drivers may face different risks than a person who rarely drives.

When reviewing coverage, consider discussing the following with a qualified insurance agent or broker:

Higher Bodily Injury Liability Limits

Increasing liability coverage can provide additional protection when you cause an accident that injures someone else.

Higher Property Damage Limits

More property damage coverage may be sensible given the value and repair cost of many vehicles on Colorado roads.

Uninsured and Underinsured Motorist Coverage

UM/UIM coverage protects you and other qualifying insureds when the responsible driver lacks sufficient insurance.

Medical Payments Coverage

MedPay can provide a source of payment for accident-related medical expenses while other claims are being evaluated.

Collision and Comprehensive Coverage

These coverages may protect your own vehicle from collision damage, theft, weather events, vandalism, and other covered losses.

An Umbrella Liability Policy

An umbrella policy may provide additional liability protection above the limits of an automobile policy, although its terms and underlying coverage requirements should be reviewed carefully.

Price is understandably an important consideration. Still, the least expensive policy may carry the greatest financial risk. Asking for quotes at several limit levels can help a consumer understand how much additional protection can be purchased for the difference in premium. Generally speaking, at Cook, Bradford & Levy, we recommend that you purchase the most insurance that you can reasonably afford. To explore what that might mean for you, please feel free to call us for a free consultation.

Review Your Policy Before an Accident Happens

The worst time to learn what an automobile policy covers is after a serious collision.

Drivers should periodically review their coverage, especially after major life changes. Buying a house, starting a business, getting married, adding a teenage driver, purchasing a new vehicle, or experiencing a significant increase in income can all justify another look at policy limits.

Begin with the declarations page and confirm:

• The vehicles and drivers listed
• Bodily injury liability limits
• Property damage liability limits
• UM/UIM limits
• MedPay limits
• Collision and comprehensive deductibles
• Rental reimbursement coverage
• Any excluded drivers
• Applicable endorsements

Also confirm that the insurer has accurate information about where the vehicle is kept and how it is used. Delivery work, rideshare driving, business use, and other activities may create coverage questions under a personal automobile policy.

Keep current insurance information in the vehicle or available electronically. Family members should know where the full policy can be located if a crash occurs.

Finding Every Available Policy After a Colorado Car Accident

A serious car accident claim should not be evaluated based solely on the insurance card exchanged at the scene.

Depending on the circumstances, coverage might be available through:

• The at-fault driver’s personal automobile policy
• A policy covering the vehicle involved
• The driver’s employer
• A commercial vehicle policy
• A rideshare company
• A household member’s policy
• The injured person’s UM/UIM coverage
• MedPay coverage
• An umbrella or excess insurance policy
• Another responsible person or business

Determining which policies apply may require investigation into vehicle ownership, employment relationships, household residency, permissive use, and the purpose of the trip.

Insurance companies do not always volunteer information about every potentially applicable policy. Written requests, statutory disclosures, and additional investigation may be necessary.

Speak With a Boulder Car Accident Lawyer About Insurance Coverages

Colorado’s minimum insurance requirements may permit a vehicle to be driven legally, but minimum coverage can be inadequate after a severe accident.

A person injured in a crash should not assume that the first policy identified represents the full amount of compensation available. The responsible driver may have additional coverage, another party may share liability, or the injured person may be entitled to UM/UIM or MedPay benefits through a separate policy.

At Cook, Bradford & Levy, our Boulder car accident lawyers investigate insurance coverage as part of the claims process. We can review available policies, communicate with the insurers, evaluate the damages, identify additional sources of recovery, and help protect our client from pressure to accept an inadequate settlement.

We represent car accident victims in Boulder, Denver, and communities throughout Colorado’s Front Range.

Reach out to Cook, Bradford & Levy at 303-543-1000 today for a free consultation about a Colorado car accident or questions concerning available automobile insurance benefits.