How much Auto Insurance Coverage Do I Need?

As legal advocates for car accident victims, we consistently delve into our clients’ auto insurance policies. While the insurer you select may seem less significant, the extent of coverage you secure holds paramount importance. Let’s discuss the types of auto insurance coverage you can obtain in Colorado and how these insurance coverages work.

If you sustained injuries in an accident in Colorado, contact the personal injury lawyers at Front Range Injury Attorneys today to schedule your free consultation. Our experienced legal team are knowledgeable and zealous advocates for our clients and their cases. We treat our clients as people, not case files. Learn more about how we can help you pursue compensation for your injuries and damages. Contact our Denver law firm to learn more.

Understanding Auto Insurance Coverage Options

When you purchase auto insurance, you’re essentially acquiring multiple types of coverage, each serving distinct purposes. These encompass liability coverage, medical payments coverage, uninsured or underinsured motorist coverage, comprehensive/collision coverage, and rental car reimbursement. The coverage amounts you choose for each aspect significantly influence your monthly premiums. These different types of coverage may become important in a car accident to protect you from liability and protect you from other people’s negligent acts.

It is a good idea to review your coverage at every renewal to evaluate making changes. Additionally, life events in between renewal dates may motivate you to make a change to coverage. In Colorado, you do not have to wait for a renewal date to change coverage. Some events that may encourage altering your insurance policy include:

• Buying or selling your car
• Adding new vehicles to the policy, especially if the vehicle is secured by a loan
• Adding or removing drivers from your insurance
• Changes in your financial situation
• Changes in the risk of vandalism or theft to your vehicle
• Changes to the value of your auto

Buying adequate insurance coverage is a balance between the value of what you need to cover and what you can afford to pay for auto insurance. Everybody has different needs and financial capabilities, so consider your individual circumstances when buying coverage.

Exploring Liability Coverage

Liability coverage stands as the sole coverage mandated by law. Liability coverage protects you from legal claims for damages arising from an accident you caused. It protects you by paying claims that would otherwise result in a lawsuit against you and your personal assets. Under liability coverage, your insurance company must pay claims as required by the policy and defend you if you are sued for covered claims they did not settle.

Under this insurance, your insurer commits to covering specified amounts for damages or injuries resulting from accidents deemed your fault. In Colorado, the legal minimum coverage stands at $25,000 per person/$50,000 per incident. While this suffices for many, individuals with substantial assets might opt for higher coverage to mitigate potential liabilities surpassing their insurance limits.

If you cause injuries or property damage in excess of your insurance liability limits, the injured party may file a lawsuit in Colorado courts to recover the fair value of their damages. Your insurance company has a duty to defend the entire lawsuit, but they are only legally required to pay up to the policy limit you purchased. A verdict in excess of the policy limits falls on you to pay the amount of money awarded above your policy limits. For people with significant assets, it is more likely that a plaintiff can pursue you to collect the judgment. That may result in seizing property, bank accounts, garnishing wages and other acts to satisfy the judgment. Buying a higher liability policy reduces the likelihood that you will suffer an excess judgment and the plaintiff’s collection efforts.

Unraveling Medical Payments Coverage

Also known as “medpay,” medical payments coverage caters to your medical expenses arising from accidents, irrespective of fault. Notably, med-pay claims are usually swiftly processed, providing crucial support to injured parties. While Colorado mandates a minimum coverage of $5,000 for most automobiles, we advocate for at least $10,000 in coverage, given its affordability compared to liability coverage. Medpay pays your claim as the policyholder, unlike liability coverage. You can also apply medpay to your passengers and you may also be able to file a medpay claim on auto insurance policies owned by family members in your home.

An important benefit of medpay coverage is that it is no fault coverage. You can recover up to your policy limit for medical bills incurred due to treatment for accident-related injuries, regardless of who caused the motor vehicle collision. You do not have to wait for the insurance company to investigate liability and your claim for benefits cannot be denied because you are partially or completely liable for the crash.

Some states offer personal injury protection or PIP coverage instead of or in addition to medpay. Colorado does not require carriers to offer PIP coverage. PIP coverage is like medpay because it pays medical bills incurred due to the accident. PIP also pays for other out of pocket costs related to your accident injuries, such as lost wages for time you missed seeking treatment.

Understanding Uninsured/Underinsured Motorist Coverage

Uninsured or underinsured motorist coverage (UM/UIM) safeguards you in accidents caused by inadequately insured drivers or those lacking insurance altogether. UM/UIM is another form of coverage that pays claims to you as the policyholder. An important distinction to make is that UM/UIM pays claims to you for crashes caused by the uninsured or underinsured motorist coverage. Essentially, it stands in the place of that person’s liability coverage.

Opting for adequate UM/UIM coverage ensures sufficient protection against potential financial hardships stemming from underinsured motorists. While the state minimum in Colorado stands at $25,000/$50,000, we recommend higher coverage levels, preferably $100,000/$300,000 or more, to adequately shield against unforeseen liabilities. UM/UIM is cheaper per-dollar of coverage than liability, so it is good value to obtain. It’s also one of the few types of coverage that pays claims to you instead of on your behalf, so it is extremely useful auto insurance coverage to obtain.

In Colorado insurance carriers only have to offer UM/UIM up to the equal amount of liability coverage you purchase. For example, if you carry $25,000/$50,000 in liability coverage, they will only sell you $25,000/$50,000 in UM/UIM. If you buy $100,00/$300,000 liability, you can buy up to that amount of UM/UIM coverage but you can opt to buy less (or none).

Additional Coverage Considerations

Collision/comprehensive policies, often dubbed as “full coverage,” shield your vehicle from damages incurred in accidents or unforeseen events like falling tree branches. Rental car reimbursement covers your rental expenses while your vehicle undergoes repairs. The decision to opt for these coverages hinges on personal preferences and financial capabilities. For many people, your automobile is among your most expensive assets, so you should think carefully about insuring your car from damage as much as possible.

Understanding the nuances of available auto insurance coverage is imperative for ensuring adequate protection. While liability coverage remains vital, med-pay and UM/UIM coverage play pivotal roles in safeguarding accident victims’ interests. We encourage policyholders to review their coverage meticulously to ascertain comprehensive protection against unforeseen contingencies.