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Who Pays What: Insurance and Auto Accidents

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Car Accident

When two motor vehicles collide, one of the first things the drivers do (after they report the accident) is exchange insurance information. Insurance coverage is an integral part of a personal injury case, since coverage ultimately determines how the damages are paid.

Where Do Personal Injury Settlements Come From?

When pursuing a personal injury claim, it is important that individuals know where the settlements actually come from. Personal injury compensation may come from several different places, including:

  • The negligent driver’s bodily injury liability coverage
  • No fault-insurance, commonly known as Personal Injury Protection, or PIP
  • Medical payment coverage, which offers limited compensation for medical related costs

Types of Auto Insurance, and What They Cover

Liability insurance covers a driver when an accident was their fault. This type of coverage will pay for the other driver’s accident-related property damage as well as the resulting medical bills from any injuries caused by the accident. Most states require drivers to carry a minimum amount of liability insurance, although it may be wise to carry more for extra protection in case you are found liable for damages that exceed your policy’s coverage limits.

Collision coverage will pay for accident-related repairs to your car. If your car is an older model, it may not be worth it to purchase collision coverage, but if it is new or relatively expensive, collision coverage may be a good investment. If the cost to repair your vehicle exceeds what it is worth, it is totaled, and collision coverage will pay the value of your car.

Comprehensive coverage will cover you if something happens to your car that is unrelated to a covered accident, such as a tree falls on it during a storm or it is stolen. Liability and collision insurance cover accidents, but don’t offer the full range of coverage that comprehensive does, although comprehensive coverage is much more expensive.

Personal injury protection (PIP) covers your medical bills, as well as those of any passengers, in the event of any accident, no matter who is liable. PIP is currently required in 13 states and the District of Columbia, and an option or not offered at all in the others. Although your own liability insurance will not cover your medical costs, PIP will pay these charges plus lost income, funeral expenses, and loss of services, up to the policy’s limits, even if you were responsible for the accident.

Uninsured/underinsured motorist protection covers you when the other driver either doesn’t have auto insurance at all, or the limits of his policy are too low to cover your damages. It’s usually not too expensive to add uninsured/underinsured coverage to your auto policy, and its benefits far outweigh the costs if you are hit by an uninsured or underinsured motorist.

States Are Different

Car insurance is a prime example of how different laws can be from state to state. Some states don’t allow a driver to register a car without showing proof of insurance, while others may require proof of insurance only upon request, usually at the time of an accident or traffic violation. According to, not every state specifically requires car insurance but they all demand financial responsibility, meaning that drivers must have insurance, a bond, or some other way to demonstrate their ability to pay for another person or property in the event of an accident.

In Colorado, drivers are required to carry a minimum of $25,000 per person for legal liability related to bodily injuries, $50,000 per accident for legal liability if more than one person is injured, and $15,000 per accident for property damage, not including damage to the insured’s vehicle. Colorado drivers must show proof of insurance when they register a vehicle, but they are not required to carry uninsured or underinsured motorist coverage.

Image by Morgan (meddygarnet).


My daughter and I first consulted with Dan Rosen after a very serious auto accident. Dan had several phone conferences with me, and Tracie was available whenever I called. We would recommend personal injury attorney Dan Rosen to anyone!
Sally from Denver, Colorado

Law Offices of Daniel R. Rosen

1400 16th Street #400, Denver, CO 80202
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