Injuries in a car accident caused by uninsured motorists
Big changes to Colorado Insurance law means consumers will finally get the coverage they pay for when they are injured by uninsured drivers.
Effective January 1, 2008, a monumental change enacted into law will affect every automobile insurance policy issued in Colorado. This change impacts a very important coverage known as uninsured/under-insured motorist coverage (UM/UIM.)
UM/UIM coverage is the only coverage you can purchase to protect yourself and your family if you are the victim of a car accident and the person who causes the crash has no insurance or too little insurance to pay for the damages they cause.
The new law that went into effect January 1, 2008, changes Colorado's UM coverage in two important ways:
- Before the January 1, 2008 law change an insurance company could "offset" the amount paid by the at-fault driver's insurance company against the amount available under your own UM policy;
- Before January 1, 2008, insurance companies were able to include "anti-stacking" language in their UM coverage's that prevented those who pay for multiple policies on multiple cars in the same household from adding the UM coverage's on each separate policy together in order to maximize coverage.
The new law makes UM "setoff" provisions illegal for policies issued or renewed in Colorado as of January 1, 2008.
This means that the UM coverage you purchase will "stack" on top of the total amount of insurance available from the "at-fault" driver. This important change in Colorado law means that you will finally get what you pay for when you buy uninsured motorist coverage. Beginning January 1, 2008, if you buy $50,000 of UM coverage to protect your family, the entire $50,000 will be available to you on top of the insurance available from the at-fault driver if you need it.
This bill which is now law can be found on the Colorado Legislature website.
Uninsured/Under-Insured Motorist coverage prior to the January 1, 2008 law change
A UM "setoff" meant that your insurance company was able to reduce the amount of uninsured motorist coverage available by the amount of insurance available from the at-fault driver. The example below provides you with a basic understanding of how UM "setoff" provisions worked before the January 1, 2008 law change.
Example: Blue Hat the (at-fault party) had insurance with bodily injury liability policy limits of twenty five thousand dollars ($25,000.00) Blue Hat was drinking and driving and hit Red Hat. As a result Red Hat had one hundred and fifty thousand dollars ($150,000.00) in medical expenses, and lost wages. Assume Red Hat purchased UM/UIM known as a safety net coverage in the amount of one hundred thousand dollars ($100,000.00) from his own insurance company.
Analysis: Under the old law an insurance company was allowed to deduct the $25,000.00 paid by the at-fault driver's insurance company from the $100,000.00 in available UM/UIM coverage despite the fact that the injured person actually bought $100,000.00 in UM coverage. As a result the insured had $25,000.00 less available in UM coverage than they thought they purchased as a safety net. In the end the $25,000.00 policy limit from the at-fault party would be recovered first. Afterwards the injured person could recover up to an additional $75,000.00 from his own UM coverage (rather than the $100,000.00 he thought he purchased.)
In addition to the "setoff" language, many Colorado insurance companies also wrote "anti-stacking" language into their policies. By writing "anti-stacking" language into uninsured motorist coverage's, insurance companies could further reduce their obligation for payment. The example below provides you with a basic understanding of how "anti-stacking" operated against consumers before the January 1, 2008, law change.
Example: Assume that Blue Hat (at-fault party) had an insurance policy with bodily injury policy limits of twenty five thousand dollars ($25,000.00). Assume Blue Hat was drinking and driving and hit Red Hat. As a result Red Hat had two hundred and fifty thousand dollars ($250,000.00) in medical expenses and wage loss. Further assume that Red Hat purchased three separate one hundred thousand dollars ($100,000.00) policies of UM coverage on three different cars in his household in the amount of ($100,000.00) on each policy ($300,000.00 total.)
Analysis: Prior to the new law change "anti-stacking" language allowed insurance companies to collect premiums for UM coverage on multiple policies covering multiple cars in the same household but then prevent the policy holder from actually using the multiple coverage's together. In our example, "anti-stacking" language would prevent Red Hat from adding his three UM insurance polices together totaling $300,000.00 in UM coverage. Instead despite paying premiums on three UM policies, "anti-stacking" language limited the coverage to only one of the three policies purchased. In our example Red Hat only gets to use one of his $100,000.00 policies despite having paid for all three.
Many Colorado insurance companies continued to sell multiple policies of UM coverage in a single household and continued to use and enforce "anti-stacking" provisions even after the Colorado Supreme Court ruled this wholly unnecessary in DeHerrera v. Sentry Insurance Company, 30 P.3d 167 (Colo. 2001). In DeHerrera, the Supreme Court held that Sentry Insurance was incorrect in its reading of Colorado Revised Statutes 10-4-609. The Supreme Court instructed Sentry Insurance (and by implication all of the other insurance companies writing policies in Colorado) that UM/UIM benefits follow the person and not the vehicle. Additionally, the Court stated that one premium is sufficient to cover an entire family of drivers compared to one premium per car.
UM/UIM coverage after January 1 2008
Kyle Bachus and Darin Schanker, the founding partners of Bachus & Schanker, LLC, working with many others who advocate for Colorado consumers have come to the rescue of consumer car insurance purchasers. Mr. Bachus and Mr. Schanker have extensive legal experience, and worked with their legal peers and the Colorado Senate in the enactment of a proposed bill in the field of auto insurance. Mr. Schanker serves as the 2008 President of the Colorado Trial Lawyers' Association. Mr. Bachus holds one of two elected seats representing Colorado on the Board of Governors for the American Association of Justice. In 2005, Mr. Bachus was appointed to serve as the co-chair of the Colorado Trial Lawyers' Association Auto Litigators Committee, a position he continues to hold.
Effective January 1, 2008, the newly revised Colorado Revised Statutes 10-4-609, is in effect. Mr. Bachus and Mr. Schanker were instrumental in the drafting and revising process in working side-by-side with Senator Shaffer in the revisions to Colorado Revised Statutes 10-4-609, that deals with uninsured motorists and under-insured motorists. In addition, Mr. Bachus testified in front of the Colorado Legislature Committee to explain why Colorado Revised Statutes 10-4-609, needed to be revised and to bring to light the implications of the loop holes within the statute that prevented consumers from receiving what they thought they were buying when purchasing UM coverage in Colorado.
As stated above, uninsured motorist "setoffs" are now illegal in Colorado on automobile insurance policies issued or renewed on or after January 1, 2008. Now, the amount of bodily injury liability coverage available from the at fault driver's insurance will be added to the amount of UM/UIM liability coverage as a safety net to cover any damages sustained in excess of the limits held by the at-fault driver. The example below provides you with a basic understanding of how UM coverage works in Colorado for policies issued or renewed on or after January 1, 2008.
Example: Blue Hat the (at-fault party) had an insurance policy with liability coverage of twenty five thousand dollars ($25,000.00) per person. Blue Hat was drinking and driving and hit Red Hat. Red Hat had one hundred and fifty thousand dollars ($150,000.00) in medical bills and wage loss. Red Hat carried UM coverage in the amount of one hundred thousand dollars ($100,000.00) per bodily injury.
Analysis: Now, after the change in the UM law, in addition to the $25,000.00 in coverage available from the at-fault driver, the injured person has access to the entire $100,000.00 in UM benefits they purchased. Red Hat has a total of $125,000.00 in coverage available: (the at-fault drivers $25,000.00 plus the entire $100,000.00 in UM benefits purchased by the injured person.)
"Anti-stacking" in uninsured motorist policies is also prohibited in Colorado as of January 1, 2008. "Anti-stacking" language is not permitted in UM automobile insurance coverage issued or renewed as of January 1, 2008. If an insurance policy does not renew as of January 1, 2008, at the first renewal period the changes in the law will affect the policy. The example below provides a brief explanation of how the new law operates regarding "stacking" of UM coverage.
Example: Blue Hat the (at-fault party) had an insurance policy with liability coverage of twenty five thousand dollars ($25,000.00) per person. Blue Hat was drinking and driving and hit Red Hat. Red Hat had one hundred and fifty thousand dollars ($150,000.00) in medical bills and wage loss. Red Hat paid for three separate insurance policies on his three cars in his household each with UM/UIM coverage limits of ($100,000.00).
Analysis: Under the new law change, Red Hat can add his three UM insurance policies together. The combined safety net coverage will now total $300,000 in UM coverage. The total of coverage available to Red Hat is up to $325,000: ($300,000 of his UM/UIM as a safety net + $25,000 of coverage carried by the at-fault driver.)
Below for your reference is the pertinent statutory language as of January 1, 2008.
Colorado Revised Statutes 10-4-609(c):
"the coverage described in paragraph (a) of this subsection (1) shall be in addition to any legal liability coverage and shall cover the difference, if any, between the amount of the limits of any legal liability coverage and the amount of the damages sustained, excluding exemplary damages, up to the maximum amount of the coverage obtained pursuant to this section. A single policy or endorsement for uninsured or underinsured motor vehicle coverage issued for a single premium covering multiple vehicles may be limited to applying once per accident. The amount of the coverage available pursuant to this section shall not be reduced by a setoff from any other coverage, including, but not limited to, legal liability insurance, medical payments coverage, health insurance, or other uninsured or underinsured motor vehicle insurance."
Summing Up How the Changes in Uninsured Motorist Law Affect You
The following chart provides the major changes to UM/UIM coverage that will affect your safety net coverage. The chart is to provide a comparison of the major effects to the law prior to January 1, 2008, and after January 1, 20008.
Prior to January 1, 20008 Colorado Revised Statutes 10-4-609 Changes:
- An insurance company was able to use the at-fault party's bodily injury liability insurance to setoff the amount paid against the insured's UM/UIM liability coverage. In doing so, limiting your insurance company's liability, and your safety net.
- Insurance companies were able to write into insurance polices "anti-stacking" language.
- UM/UIM coverage only applied to vehicles that the insured was actually driving while injured or while a pedestrian.
After January 1, 20008 Colorado Revised Statutes 10-4-609 Changes:
- This act shall take effect January 1, 2008, and shall apply to policies issued or renewed on or after the applicable effective date of this act.
- The new law requires insurance companies to provide consumers with the option of carrying equal limits of UM/UIM as compared to bodily injury liability limits.
- An insurance company may not setoff the amount of damages with the at-faults bodily injury liability insurance coverage against the insured's policy limits.
- An insurance company may not write into an insurance policy "anti-stacking" language as of January 1, 2008. In this regard, your insurance agent will likely tell you that you will be able to save some money by dropping the additional premiums you have for each vehicle. Although you will save money, you will limit your coverage and limit your insurance company's liability in the total amount of UM/UIM coverage they must pay if you are involved in an accident. In doing so, you will limit your safety net.
The point of this article and future uploads on this topic by Bachus & Schanker is the same goal as the Senate had in the enactment of this new law on June 1, 2007, and the same goal Bachus & Schanker undertakes with every case; to preserve the public peach, health and safety of Colorado individuals and families.
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