Car insurance combines several types of coverage into one policy. Typically, your auto/car/truck policy will include some combination of comprehensive, collision, medical, liability and uninsured motorist coverage.
So what do you need? It depends on your specific situation. Liability coverage pays for the damage you cause to others if your car is involved in an accident. It also protects you from being wiped out financially if you are sued following an accident. The greater your assets, the more you stand to lose. We recommend you choose limits of liability that will protect your financial assets. People who have very little in assets may be one purchasing the Colorado state required minimal limits of $25,000/$50,000. This would cover you if you caused bodily injuries to another person. If it was one person, then your insurance company will pay up to $25,000. If you negligently injure more than one person, say driver and passengers, then your insurance company would pay out a maximum of $50,000 for your negligence in causing the accident and causing the personal injuries to the injured car accident victim.
Collision covers damage to your car from an accident.
You need to balance the decision to have this type of coverage against the value of your car. If your car is a new car, then you would want to have collision coverage. However, if you have an old clunker that is not worth much, then you may want to save money and not obligate yourself in paying the extra insurance premium or cost for this type of coverage. Collision coverage is a personal decision based upon your tolerance for risk and whether you car is worth the extra expense.
Comprehensive coverage pays for your car if it is stolen, vandalized or damaged in some way other than in a collision.
If you have a valuable car, then you would want to have this coverage. Again, it is a decision based upon your risk tolerance and this can cover hail damage which can be an important coverage in Colorado Springs as we are a City that has a very high risk of hail damage each year. With increasing crime rates in Colorado and around the United States, this is always a good coverage to purchase. You can lower your insurance premium by choosing a higher deductible for both Collision and Comprehensive coverage, but you will pay more up front if your car is damaged so this is a personal decision based upon risk tolerance.
Medical Payments Coverage provides for medical expenses to you and your passengers that occur as the result of an accident.
The way you use your car may make a difference in the amount of medical coverage you need. You may feel that you have adequate health insurance to cover any injuries sustained in a car accident, but Med Pay coverage will greatly help with hospital, ambulance and other doctor bills. So, I would always recommend that your purchase this coverage at an amount of at least $5,000 or more depending again on your risk tolerance. The good think about Med Pay coverage is that, if you do have a case against an at fault driver, you can use your med pay coverage and recover damages and your insurance company which pays out under your Med Pay coverage will have no lien on your case (this is not true with health insurance, Medicaid or Medicare which will always have a lien and will try to get its money back from any settlement that you conclude with the at-fault driver’s insurance company). This is commonly called subrogation rights and will be the topic of another article.
Uninsured/Underinsured Motorist coverage is very important because you could be severely injured and the at-fault driver may end up having no insurance at all (even though minimal limits are required in Colorado).
Some people purchase insurance to get their car registered and licensed then fail to pay their insurance company and end up being “uninsured”. This is a coverage that we highly recommend as lawyers because without this coverage, you could be left with severe injuries and not have any real legal remedy against an uninsured/judgment proof, negligent driver. So, please purchase this coverage!
In Colorado, everyone is required by Colorado law to carry minimum limits of $25,000/$50,000 in Bodily Injury (which covers you when you injure another driver/passengers) and $15,000 in Property Damage (which covers you if you cause property damage to another vehicle).
Remember that these are just the minimum requirement and based upon your income and assets, you may certainly want to carry much more as an injured driver or a deceased driver’s family may be seeking much higher damages than what is minimally required in Colorado.
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