Auto Insurance – What Do I Really Need?

By Jacob F. Kimball
Managing Attorney – Civil Division
The Gasper Law Group, PLLC

Auto Insurance Illustration - 01-23-15

What Types of Auto Insurance Do I Need?

Too many consumers do not understand what type of automobile insurance they have purchased or should have purchased to meet their needs. Oftentimes, people do not discover what their insurance actually covers (or does not cover) until a catastrophic event occurs—and the discovery is usually not a happy surprise. This article explains several of the standard types of auto coverage. Of course, it is the actual insurance policy and state law that will determine what your policy actually covers, but the basic concepts are discussed below.

Liability Coverage

To be “liable” means to be legally obligated or responsible to another for some act or failure to act. “Liability coverage” basically covers bodily injury, death, and property damage arising out of the use of the motor vehicle that the policy owner causes to another person’s body or to another person’s vehicle unintentionally. In other words, liability coverage will not cover injuries you cause yourself or your own vehicle, or those that another person causes you or your vehicle. Colorado statute, the “Motor Vehicle Financial Responsibility Act,” requires motor vehicles owner-operators to have an automobile insurance policy that contains liability coverage of at least $25,000 per person and $50,000 per accident.

Collision Coverage

Collision coverage covers accidental damage to your own vehicle. It covers damage if you wreck your own vehicle or if another driver damages your vehicle. Most auto lenders will require that you purchase collision coverage, because it protects the collateral that secures their auto loan.

Comprehensive Coverage

Do not be fooled by the word “comprehensive”—comprehensive coverage is not comprehensive. Instead, comprehensive coverage generally covers only damage to the vehicle caused by perils other than collisions, such as vandalism, theft, fire, natural disasters, and falling objects. It also covers an unfortunately common occurrence in Colorado: damages from hitting an animal. Like collision coverage, most auto lenders will require comprehensive coverage to make sure you are adequately protecting their collateral.

Medical Payments Coverage

Medical payments coverage, which is often abbreviated “medpay,” covers medical expenses incurred by the insured due to bodily injuries arising from the ownership, maintenance, or use of a motor vehicle. Medpay is generally limited to accident-related trauma or medical care; thus, it will not cover damages such as wage losses. Typically, the medpay payments are made directly to the medical providers who provided the care in question. An insurer must give its insureds the option of purchasing medpay, and medpay coverage will exist unless the named insured on the policy rejected it in writing.

Uninsured and Underinsured Motorist (“UM/UIM”) Coverage

Uninsured motorist insurance—often abbreviated “UM”—applies when the person who injured has no insurance coverage. Underinsured motorist coverage—often abbreviated “UIM”—applies when the person who injured you has some insurance, but it is not enough to compensate you for your injuries and damages. This type of insurance must be offered to you when you purchase your policy; unless you waived, opted out, or rejected it when you purchased your policy, then you likely have it. In Colorado, making an uninsured or underinsured motorist claim will not increase your premiums or cause your insurer to cancel, reduce coverage, or refuse to renew your policy.

Conclusion

As mentioned above, these are the general types of coverage, but most insurance companies offer a variety of supplemental coverage, different sized deductibles, and coverage limits to meet your budgetary constraints and protect your assets and family members from unexpected events.

Insurance coverage plays a very important role in accidents causing injuries. If you have been injured in an accident, finding available insurance coverage in your own policies and in the policies of the person who harmed you is of paramount importance. If the person who injured you has little or no insurance, it may be extremely difficult to get the compensation you deserve. For this reason, we recommend you hire an experienced personal injury attorney, such as those at The Gasper Law Group, to help you navigate the insurance coverage issues you are likely to face.