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Big changes to Colorado Insurance law means consumers finally get the coverage they pay for when they are injured by uninsured drivers.
The newly revised Colorado Revised Statute 10-4-609 (PDF file), effective January 1, 2008, addresses Uninsured Motorists (UM) and under-insured (UIM) motorist claims and closes the loopholes that prevented consumers from receiving the full benefits they thought they were buying when purchasing UM/UIM coverage in Colorado. Every Uninsured and/or Underinsured (UM/UIM) automobile insurance policy issued or renewed in Colorado on or after January 1, 2008 is affected by this change.
This new Colorado Uninsured Motorist law changes Colorado's UM/UIM coverage in two important ways.
- Before January 1, 2008, your 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 coverages that prevented those who pay for multiple policies on multiple cars in the same household from adding the UM coverages on each separate policy together in order to maximize coverage.
- 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.
- An insurance company may not set-off the amount of compensation from the at-faults bodily injury liability insurance coverage to reduce UM coverage available.
- An insurance company may not write into an insurance policy "anti-stacking" language. 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.
What is liability insurance?
Property damage liability coverage pays for the physical damage to the vehicle damaged in the accident by the at-fault driver. Bodily injury liability coverage provides compensation for injuries sustained in a motor vehicle collision. The State of Colorado requires that every owner of a passenger vehicle (car or truck) have at least $25,000.00 in bodily injury liability insurance coverage.
What is Uninsured (UM) or Under-Insured (UIM) Insurance?
Despite the fact that Colorado law requires every automobile owner in Colorado to maintain insurance on their vehicle, many drivers who cause accidents do not have car insurance and are therefore "Uninsured Motorists." In other cases, the driver who caused an accident may be insured but may not have enough coverage to pay for all of the injuries caused in the accident and is "under-insured." We are frequently asked, "What happens to my case if the person who caused the accident is uninsured or doesn't have enough insurance?"
What happens if I'm injured in a Denver uninsured Car Accident?
If the at-fault driver doesn't have insurance, or does not have enough insurance, we look to your automobile insurance policy for compensation for injuries and losses. Under Colorado law, insurance companies selling automobile insurance in Colorado are required to sell Uninsured/Underinsured Motorist Insurance as part of every policy sold unless the coverage is specifically refused in writing. Uninsured or under-insured (UM/UIM) coverage is a separate coverage that provides coverage to you and your passengers if injured in an accident caused by an uninsured or under-insured driver. This coverage "steps into the shoes" of the at-fault driver and pays you the same kind of damages you could have recovered from the at-fault driver's insurance had the driver been insured. Uninsured motorist insurance coverage may be available to pay your claim if any resident in your household owns a car that has Uninsured Motorist coverage regardless of whether you were occupying the car at the time of the accident. In fact your Uninsured Motorist coverage will even cover you if you are a Pedestrian hit by an uninsured driver.
What is "Setoff"?
Prior to January 1, 2008, your insurance company would be able to "setoff" or reduce the amount of UM coverage they would have to pay you by the amount of liability insurance available from the at fault driver.
Example: Kendra was driving home from work and was hit by Josh after a night out drinking with his buddies. His blood alcohol level was above the legal limit and he was cited for driving under the influence. Kendra was severely injured and spent many months in the hospital and in rehab. She was unable to work during her recovery time and her medical expenses and lost wages totaled $250,000. Josh had insurance but his bodily injury liability policy limit was only $50,000. Kendra had purchased $200,000 in UM/UIM safety net coverage on her own policy.
Conclusion Before January 1, 2008: After Josh's insurance company paid Kendra the $50,000 per Josh's policy limits, Kendra's insurance company was then able to deduct or "setoff" that $50,000 from her UM/UIM coverage, leaving her with only an additional $150,000 in coverage. Her total compensation was $200,000 and she was left to pay the remaining $50,000 out of her own pocket.
Conclusion After January 1, 2008: Josh's insurance company paid Kendra the $50,000 per Josh's policy limits. Kendra's insurance company was legally obligated to pay her the total of her UM/UIM policy limits of $200,000. Her total compensation was $250,000 which covered all of her medical expenses and lost wages.
What is "Anti-Stacking"?
Another change in the law stops insurance companies from using "anti-stacking" language when writing a policy. Prior to the new law, insurance companies could collect premiums for UM/UIM coverage on multiple policies covering multiple cars in the same household. However, they would not allow the policy holder to use these multiple coverages at the same time.
Example: Andrew and Samantha were both driving on the interstate when Samantha rear-ended Andrew's car because she was distracted while talking on her cell phone. Samantha was uninsured. As a result of the Denver uninsured Car Accident, Andrew had medical expenses and lost wages totaling $250,000. In addition to his liability coverage, Andrew had purchased and paid premiums on three separate $100,000 UM/UIM policies for each of his three cars for a total of $300,000.
Conclusion Before January 1, 2008: Andrew's insurance policy contained anti-stacking language which allowed the insurance company to limit Andrew's coverage to only $100,000 of UM/UIM benefits on one car policy despite the fact that Andrew paid for UM coverage on 3 different vehicles, paying premiums for $300,000. His coverage was $150,000 short.
Conclusion After January 1, 2008: Under the law change, Andrew was able to combine or "stack" his three policies for a total of $300,000 which was more than enough to cover his $250,000 in medical expenses and lost wages.
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 essentially 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.
Can "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.
Example: 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, her insurance company paid the additional $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.
Summing Up Colorado Uninsured Motorist Law
UM Law Prior to January 1, 2008
UM Law Applicable to All Auto Policies Issued or Renewed in Colorado On or After January 1, 2008
What You Should Do Next
Call your insurance company today! These new laws were effective on January 1, 2008, and it applies to any policy issued or renewed on or after January 1, 2008. It does not automatically update or retro activate an existing policy. You must notify your insurance company and write a new policy or renew your existing policy.
What Else Do I Need to Know?
The new law requires insurance companies to provide consumers with the option of carrying equal limits of UM/UIM as up to the bodily injury liability limits. So, if your liability coverage is $100,000 then you are eligible for $100,000 in UM/UIM coverage.
Saving Money by Dropping the Premiums on Additional Cars is Not a Good Idea.
Your insurance agent may try to talk you into dropping coverage on additional cars in order to lower your premium. You will save some money, but it also reduces the liability amount your insurance company must pay you if you are involved in an accident. By canceling the additional premiums, you reduce the amount of your safety net.
Below for your reference is the revised 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."
Contact Us for Help on Your Uninsured Motorist Accident claim
Our founding attorneys, Mr. Bachus and Mr. Schanker, participated in the initial drafting process in working with Senator Shaffer in the revisions to Colorado Revised Statutes 10-4-609, Colorado's UM/UIM laws and understand the importance of these changes. If you are injured in an Auto Accident, or your loved one suffers serious injury or death in a Car Accident, contact Bachus & Schanker, LLC in Colorado. Our team of Auto Accident and wrongful death lawyers can evaluate your case and help you understand your rights.