Big Changes to Colorado Insurance Law Means You Get the Uninsured Motorist Coverage You Pay For (Part Four – “Set-off” and “Anti-Stacking”)
Now that we know about liability insurance and uninsured and under-insured coverages and how insurance companies used “set-off” and “anti-stacking” together to lessen your coverage, let’s talk about how insurance companies used “set-off” and “anti-stacking” together.
Could “Set-off” and “Anti-Stacking” be Used Together?
Prior to January 1, 2008, insurance companies could reduce your compensation by “setting off” and “anti-stacking” your compensation at the same time. The law now prohibits that practice.
Tony ran a red light and hit Connie, causing $250,000 in medical expenses and lost wages. Tony’s liability coverage was $50,000. Connie carried $100,000 in UM insurance and additional $100,000 UM coverage on her second car.
Conclusion Before January 1, 2008:
Because he was found at fault, Tony’s insurance company paid Connie his policy limits of $50,000. Connie’s UM insurance company then “setoff” or reduced their payment by the $50,000 paid by Tony’s insurance to $50,000. Because of “anti-stacking” language included in her own UM policy Connie’s insurance company would not pay the additional $100,000 UM coverage from her second car. Connie’s total compensation was $100,000 ($50,000 from Tony’s policy and $50,000 from her UM policy) leaving Connie $150,000 short.
Conclusion After January 1, 2008:
Tony’s insurance company paid Connie his policy limits of $50,000. Connie’s insurance company was not allowed to “setoff” this $50,000 and because Connie’s injuries were so severe, paid the additonal $100,000 in policy limits under the first UM policy paid to Connie. In addition, her insurance company is prohibited from using “anti-stacking” language in her policy and must pay her the additional $100,000 UM/UIM coverage from her second car. Connie’s total compensation is $250,000.
To be continued. Next up: What should you do?