Are You Underinsured?

Under the tort system, if you injure someone in an accident, his or her medical bills, loss of wages and pain and suffering most likely will be paid by your bodily injury liability coverage. It is important that you choose the appropriate level of coverage for your individual financial situation. For example, if you have assets worth more than $25,000, the state minimum required liability insurance ($25,000 per injured individual, with a $50,000 maximum per accident) is not sufficient to protect you. As with the old law, an injured motorist can sue you for pain and suffering as well as actual damages. Once your limits of insurance coverage are exhausted, YOU become personally exposed to whatever more you might owe the other car’s occupant(s) if you are the at-fault driver.

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Uninsured/Underinsured Motorist (UM)

Uninsured/underinsured motorist coverage (UM) insures you against an uninsured or underinsured motorist who may cause injury and damage to you or your vehicle. Here is how it works: If you are driving and are hit by someone who is UNDERinsured (has less coverage on their vehicle than you do on yours and your claim is worth more than their available limits), your UM insurance will pay the difference between your actual damages and the at fault driver’s insurance, up to your UM limit. Should an UNinsured driver cause an accident with you, your insurance should compensate you for 100% of your injuries, losses and damages up to the limits of your UM coverage. If you do not have adequately high limits of coverage and the person who causes the accident does not have insurance or is underinsured, you and your passengers will not be fully compensated for the injuries, damages and losses you suffered. A driver should never buy less underinsured motorist coverage than his or her liability limits and, if at all possible, never less than $100,000/300,000 of liability and UM coverage. Of course, if you have assets (your home, savings and other personal and real property) worth more than $100,000, your levels of coverage (liability and UM) should be no less than their value.

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Medical Payments (Med-Pay)

As mentioned above, a Colorado-insured driver is no longer entitled to receive medical and rehabilitation expenses under their own policy—regardless of fault. This means that if you are in an accident caused by someone else, YOU are responsible for paying your bills. Unless or until the other driver’s insurance company accepts responsibility for those losses, not just for repairing or replacing your car, you won’t be reimbursed for those expenses. In addition, should your health insurance pay your medical bills arising out of your accident-caused injuries, it may also expect to be paid back out of any settlement you make from the other driver’s insurance. If you are seriously injured due to another’s negligence, this can leave you owing money even after a settlement or with very little left to compensate you for your injuries, damages and losses. Medical payments (Med-Pay) coverage available from your auto insurance carrier provides very low cost coverage to you and your injured passengers, regardless of fault, and can help protect you from financial disaster caused by large, unpaid medical bills. You should consider buying as much as you can. Typically, insurance companies will sell you up to $100,000 in med pay at a very low rate and it is a bargain at that price, with no deductibles or co-pays.

Take the time to review your auto insurance policy to determine if you have adequate insurance. If you have questions, contact your insurance agent to review your policy.

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