As a Colorado driver, you know that you must have auto insurance in order to legally drive in this state. State law requires you to maintain minimum amounts of insurance coverage in two specific categories. However, if you carry only this minimum mandatory amount of insurance, you will be legal but you may still lack an adequate amount of auto insurance. That is what underinsured means.
For instance, as the Rocky Mountain Insurance Information Association explains, you must carry bodily injury liability insurance in the amount of $25,000 per person and $50,000 per accident. But if you cause an accident and the other driver sues you for damages in excess of your policy limits, the jury could agree with him or her that (s)he suffered personal injury and property damage worth more than your insurance policy will pay. If they return such a verdict, you will be personally liable for the judgment amount over and above your policy limits. In other words, you were underinsured with regard to this accident.
Insurance experts recommend that you carry bodily injury liability coverage of at least $100,000 per person and $300,000 per occurrence. Likewise, Colorado requires you to carry only $15,000 of property damage liability coverage per occurrence. Given today’s outrageous costs of auto repair, $15,000 likely is insufficient to cover a jury verdict against you.
Optional insurance
Bodily injury liability and property damage liability are the only types of coverage Colorado requires you to have in order to drive legally. However, you may wish to consider buying the following types of insurance as well:
- Uninsured/Underinsured motorist: covers your medical expenses, etc. if you are injured by a driver who himself or herself has no or inadequate insurance
- Medical payments coverage: covers your medical payments specifically
- Collision: covers damage to your vehicle in the event of an accident
- Comprehensive: covers damage to your vehicle not caused by a wreck, such as fire, hail, flood, etc. as well as theft
This information is only intended to educate; you should not interpret it as legal advice.
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