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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
COLORADO INSURERS & CONSUMERS GEAR UP FOR COLORADO'S TRANSITION TO TORT AUTO INSURANCE ON JULY 1 st -July premium notices will require important decisions about balancing savings with protection & peace-of-mind.
June 9, 2003 - Most of the largest auto insurance companies in Colorado publicly filed their rates with the Colorado Division of Insurance this week in preparation as the tort system replaces the 30-year old no-fault system on July 1, 2003. The figures meet early predictions that the average Colorado auto insurance consumer will see some immediate cost savings depending on the coverage they choose to buy under the tort system. On average statewide, consumers who already buy full coverage under no-fault (liability, collision, comprehensive and uninsured motorists coverage) will see a 20-25% overall reduction in their auto insurance premium. Customers who buy only the state required liability coverage to protect themselves when they cause an accident will see an average cost savings of more than 30%.
Of course, these industry estimates are only averages and will vary greatly from person-to-person. Savings will also be impacted by the amount of new coverage options consumers decide to buy under the tort system. More than 70% of consumers in the 37 other tort states buy a certain amount of additional medical coverage (commonly called medical payments coverage or MPC) and many purchase greater amounts of liability and uninsured motorist coverage.
The important difference between the old no-fault system and the tort system is that consumers will now have choices when it comes to buying the amount of auto insurance coverage that they want, need and can afford. Consumer should also keep in mind that their company may have already offered lower rates than another company, an important point to keep in mind when comparing the percentage cost savings between companies. Also when comparing cost savings, consumers' comfort level with the service they are receiving remains a key factor in evaluating their overall satisfaction with their insurance company.
The Rocky Mountain Insurance Information Association advises Colorado auto insurance consumers to assess their personal situations and make informed decisions on what coverage they 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:
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