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Rocky Mountain Insurance Information
NEWS
6565 South Dayton St. #2400, Greenwood Village, Colorado 80111
Serving Colorado, New Mexico, Utah & Wyoming
Contact: Carole Walker, Executive Director
(303) 790-0216 or 1-800-355-9524
Release Date: Immediately
Topic: Insurance
CONSUMERS NEED TO BONE UP ON COLORADO’S NEW AUTO INSURANCE SYSTEM.
May 20, 2003 –On July 1, 2003 Colorado will officially join 37 other states that operate under a tort or “fault-based” auto insurance system. Consumers who have only purchased insurance under Colorado’s 30-year old no-fault system will need to get familiar with the new choices available to them after the effective date. While policyholders don’t need to rush to contact their agents or company (they may not have all the answers yet), they may want to start weighing their options and bone up on how tort works. Companies are already gearing up for the transition to tort and will be contacting policyholders in the coming weeks to inform them of the new mandated and optional coverage that will be available to them after July 1st. After July 1st, policyholders can either stick with their current no-fault policy until it expires, or contact their company about the possibility of switching to a tort policy.
In the meantime, the Rocky Mountain Insurance Information Association has free educational brochures (download PDF or call 303-790-0216 for a printed copy) and information at www.rmiia.org for policyholders who want to start making informed decisions on what coverage they may want to buy under the new system. “Consumers will have more choices under the tort system to buy the coverage they feel that they want, need and can afford,” says Carole Walker, Executive Director of the Rocky Mountain Insurance Information Association. “People need to balance their pocketbook with what assets they have to protect and their own peace of mind.”
COVERAGE UNDER A TORT AUTO INSURANCE POLICY
The greatest difference from a no-fault system is that you don’t have to purchase extra coverage (PIP) from your own auto insurance company to pay for your own medical bills. Much of the coverage you buy remains the same - think of it as six separate parts:
- Bodily injury liability coverage (mandatory: $25,000 per person and $50,000 per accident in Colorado) is in case you cause an accident in which someone is hurt or killed. Many insurers recommend carrying at least $100,000 per person and $300,000 per occurrence. You should consider what assets you have to protect and what your pocketbook can bear when deciding how much to purchase.
- Property liability coverage (mandatory: $15,000 in Colorado) is for when you damage someone else's property. Usually it's someone else's car, but it could apply to buildings, utility poles, garage doors, etc.
- Collision coverage (optional) covers damage to your car from a collision with another car, a brick wall, a fire hydrant, etc.
- Comprehensive coverage (optional) is in case your car is stolen or damaged in ways that don't involve a collision. Covered risks include hail, fire, theft, flood, earthquake, explosion, and falling objects.
- Uninsured motorist coverage (optional) is available in two forms - property damage coverage and medical coverage to pay your bills when you are hit by a driver without insurance.
- Medical payments coverage, or MPC (optional), pays for reasonable expenses you and your passengers incur because of injury in a motor vehicle accident, regardless of fault. Coverage amounts available vary from company to company.
INSURANCE CHECK UP QUESTIONS
What kind of deductibles can I afford? Opting for higher deductibles can lower your auto insurance premiums, but you also need to consider how much you can afford out-of-pocket in the event of an accident or vehicle damage.
What is the estimated value of my assets? Knowing this can help you determine how much liability coverage to purchase.
Do my family and I have health insurance? What are the out-pocket maximums, deductibles and co-pays? These questions might be considered when deciding whether or not to purchase medical payments coverage (MPC) and how much.
Is my car paid for or do I have a loan? Lenders usually require you to carry collision and comprehensive coverage in addition to mandated coverage.
What is the estimated market value of my car? If your car is fully paid for you might consider the value of what you are insuring compared to the annual cost of insuring it when deciding whether or not to purchase collision or comprehensive insurance.
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Rocky Mountain Insurance Information Association is a non-profit consumer information organization. Affiliated with the Insurance Information Institute, RMIIA has been serving consumers and the media since 1952.
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Updated:
February 28, 2007 1:52 PM
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