Are you shopping for new auto insurance in Colorado? Before you commit to a policy or company, it is worth taking a quick review of what your policy should cover and include. The last thing you want is to pay too much for inadequate coverage or miss a key clause that could really save you trouble later on.
To begin, Colorado’s minimum insurance coverage requirements are:
- $25,000 per person for bodily injury
- $50,000 per accident for bodily injury
- $15,000 per accident for property damage
Your auto insurance policy needs to cover these minimums by law. If you are offered a policy that doesn’t reach these minimums, then find another insurance company! You do not want to buy an unlawful policy from a company that might be looking to defraud its customers.
Furthermore, you should consider increasing your liability insurance coverage to as high as you can comfortably afford. If you cause a car accident and your liability coverage doesn’t take care of all the other driver’s damages, then you could be directly liable for whatever is left unpaid. The other driver can try to get compensated through your private assets, like your bank accounts and real estate. Most insurance agents agree that $100,000 per person for bodily injury is the lowest you should go if you can afford it.
Four More Forms of Insurance Coverage to Add
To improve your auto insurance policy, you should make sure you have good forms of these coverages:
- Collision and comprehensive coverage: This form of insurance coverage is usually what people imagine when they think about car insurance. It is used to protect the value of your vehicle if it gets damaged in a car accident, especially if you caused it. If the policy cap is lower than what it takes to fix your vehicle, then you will be out of luck. The situation only gets worse if you took a car loan and haven’t fully paid it off, and the remaining value exceeds the collision and comprehensive coverage cap. Be careful when choosing this insurance type because it could later have a larger effect on your finances than you realize.
- Medical payments coverage: If you are injured in a car accident, even if it was the fault of the other driver, you are responsible to pay your own medical bills as they are incurred, meaning you can’t just ignore them for the time being. Medical payments coverage or med pay insurance is used to cover those bills now while you are still waiting to see if the other driver’s insurance company will give you a settlement later. Colorado law requires auto insurance companies to offer each customer med pay coverage, but it doesn’t have to be taken.
- Uninsured/underinsured motorist (UM/UIM) coverage: Nationwide, it is estimated that about 12% of all drivers do not have auto insurance. In Colorado, some estimates increase that number up to 25%. If you get hit by a driver with no insurance or not enough insurance to cover your damages, then your situation will be much more difficult – unless you have UM/UIM coverage. Through this policy, you can file a first-party claim against your insurer to get coverage for your damages that the other driver couldn’t pay.
- Umbrella coverage: Some auto insurance companies offer umbrella coverage to add to a policy. Umbrella coverage pays for damages that aren’t covered by any other type of insurance policy or that exceeded those policies. But more importantly, it can be used to cover essentially any of your assets from the opposing driver if you caused a crash. For example, it can be used to stop the driver from filing against your home if you just paid it off.
If you have any questions about the auto insurance you should buy, then speaking with an insurance agent is a good start. They can go into the details of your assets and expectations to look for a policy formed to your needs. Each company is different, so be sure to shop around, too, if you have the time.