While it may not be fun to spend more money on insurance, Colorado’s increasing population has been one reason for increasing auto accidents. Here is a guide to understanding the type of coverage you are legally obligated to hold.

Does Colorado Require Minimum Coverage?

Most every state, including Colorado, requires motorists to have vehicle insurance. In the event of an auto accident, auto insurance — or the lack of — plays an important role in sorting out the “whose company pays for what” quandary.

Insurance Terms You Should Know

Insurance is important, yet it can be very complex. Here are some basic terms to help you understand basic auto insurance coverage:

  • Bodily injury liability coverage pays for injuries to other people when the insured driver is at fault.
  • Property damage liability coverage is for when you damage someone else’s property (car, buildings, or other structures) with your vehicle.
  • Collision coverage will pay for damage to your vehicle if you hit another car or some other object.
  • Comprehensive coverage covers your loss if your automobile is stolen, or damaged by fire, theft, flood, earthquake, explosions, falling objects, or wildlife — pretty much any harm that doesn’t involve a collision with another vehicle.
  • Uninsured/underinsured motorist (UM/UIM) coverage will take care of your medical expenses if you are involved in an accident with a driver who either has no insurance or inadequate coverage to pay your bills.
  • Medical payments coverage (med pay or MPC) will cover the medical bills and funeral expenses for you and your passengers, no matter who was at fault for an accident.

It is important that you understand the various types of coverage because not all auto policies are the same, and Colorado has specific requirements regarding the coverage drivers in the state must have.

Auto Insurance Requirements in Colorado

In Colorado, drivers are required to carry bodily injury liability coverage of at least $25,000 per person or $50,000 per accident, and $15,000 per accident for property damage.

Regarding uninsured/underinsured motorist coverage, Colorado insurers are required to offer UM/UIM in the same amount as the bodily injury liability limits selected by the insured, although UM/UIM coverage may be waived, but only in writing. Limits starting at $25,000/$50,000 up to the same amount of liability coverage purchased on the same policy may be selected.

Auto insurance companies doing business in Colorado are required to offer $5,000 in medical payments coverage to customers. This coverage will be added to policies automatically unless customers opt out, whether they are purchasing new coverage or renewing an existing policy. Colorado law requires that the insurer hold $5,000 of medical pay coverage for 30 days to pay trauma bills first. Like UM/UIM coverage, med pay may be rejected only in writing.

Colorado law does not require that motorists carry collision coverage. Comprehensive coverage is also optional, although a bank might require it if you have a loan on your vehicle.

Don’t Skimp on Insurance Coverage

Although it is a good idea to buy more than the minimum auto insurance coverage in order to protect your assets, many people carry only the minimum insurance required in their state because they are trying to save money.

However, the damages caused by a car accident in Colorado can be considerable, enough to quickly wipe out your savings as well as your assets if the accident was your fault but you don’t have enough coverage, since once your limits are reached, you are responsible for the rest.

Spending money on insurance isn’t necessarily fun, but sufficient coverage will most likely come in handy at some point, so it’s important to purchase a policy that will protect your resources should disaster strike.

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