Colorado insurance laws are designed to protect the consumer.
The Colorado Division of Insurance is the regulatory agency for insurance companies who wish to conduct business within the state. The agency examines both the marketing activities, legal compliance and financial solvency of all insurance companies who sell policies to Colorado residents. To meet the financial responsibility laws, Colorado residents must purchase their automobile policies from a company to which the agency has granted approval.
Bodily Injury Liability
Colorado requires you to purchase bodily injury liability coverage, which pays others for medical expenses, lost wages and incidental expenses related to an accident you cause. The amount the insurance company will pay is the amount of coverage you purchase. Legally, you must provide at least $25,000 in coverage for one person and $50,000 for all people who suffer injuries in the same accident. Should the injured party's expenses exceed your policy limits, he may file a lawsuit to recover the additional costs. Therefore, if you have personal assets you need to protect, you may wish to purchase more coverage than the legal minimum.
Property Damage Liability
Property damage pays others for damages to the vehicles or other real property due to an accident you cause. It does not pay to repair your own car. The legal minimum for property damage liability under Colorado law is $15,000 per event.
Medical Payment Coverage
A Colorado statute requires all automobile insurance policies to include medical payment coverage with a minimum limit of $5,000. This coverage pays medical expenses for you and your passengers, regardless of who causes the accident. You can reject the coverage in writing, and the insurance company must retain proof of the rejection for a minimum of three years.
Underinsured/Uninsured Motorist Coverage
Despite laws requiring drivers to carry, at minimum, liability insurance, some drivers do not purchase the coverage. If you are unlucky enough to suffer an injury in an accident caused by one of these drivers, you may not have the means to pay for your medical bills or lost income. Uninsured motorist coverage will pay your medical bills, lost wages and pain and suffering up to the limits of your policy. Underinsured motorist coverage provides the same benefits, but covers you when the other driver's policy limits are less than your expenses. Colorado law does not require you to purchase this coverage, but the law requires all insurance companies selling policies in the state to offer them to you. The law applies to renewals as well as new policies, and the amount of coverage must be equal to or greater than the bodily injury liability policy limits. You can reject the coverage by providing the agent or company with a written notice that you choose to waive the coverage.
Penalties for Driving without Insurance
Colorado drivers must carry proof of insurance with them whenever they drive. Even if you have insurance, if you cannot provide proof to a law enforcement officer, you may have to appear in court to answer a summons for failing to possess proof of liability insurance. If your contact with law enforcement is due to an accident, the officer may confiscate your license and issue a notice that your license will be suspended in one week unless you furnish an SR22 form within that time and maintain it for three years. If contact is not the result of an accident, you may receive a ticket. Each offense results in four points charged to your record and the possibility of 40 hours of community service. The fine is at least $500 for a first offense and at least $1,000 for every subsequent offense. Your license will be suspended until you show proof of insurance if it is your first offense. Second and third offenses will result in suspensions of four months and eight months, respectively. A $40 reinstatement fee applies if the state suspends your license.
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