Is Colorado a no-fault car insurance state?

Colorado is home to more than 88,000 miles of public roads. On these roads, Colorado residents drive an estimated 28.1 billion miles per year in nice and sometimes severe weather conditions.

Since many cities and counties are spread out in Colorado, a majority of residents here are reliant on their vehicles to commute and get around town.

Colorado’s heavy dependence on vehicles for a mode of transportation is obvious when you learn that there are just 3.8 million licensed drivers in the state and 4.7 million registered vehicles.

Each of these vehicles must be insured as required under state law. In the past, no-fault insurance was necessary for all vehicles; now, new laws have been passed and there are different insurance requirements.

Let’s discuss what you should know about no-fault insurance in Colorado.

If you live in Colorado and need better auto insurance, enter your ZIP code above and compare at least three to four policies today!

What is no-fault car insurance?

There are two different types of car insurance systems in the U.S. The first and most popular type of system is called a tort system. The second and less popular system is known as the no-fault system.

In a no-fault state, auto accidents that involve injury are handled differently than they would be handled in a fault state; under pure no-fault rules, injury claims would be settled by the injured party’s own insurance company.

The damages for medical treatment, transportation, and lost wages would all be paid out under the policyholder’s Personal Injury Protection benefits. Since the injured party has their own insurance, they are prohibited from suing the other party for their injuries.

– What is the difference between tort and no-fault?

All but 12 states in the U.S. are tort states. The biggest difference between a tort and a no-fault system is that drivers aren’t limited in their rights to sue when they live in a tort state.

If they are injured, the fault must be determined before the insurer will pay for any liability damages. Some no-fault states have modified systems that allow claimants to sue only after statutory thresholds have been exceeded.

Another difference that is very much notable is that the claimant might not necessarily file a claim against their own benefits when they are injured in a tort state. While you can purchase Medical Payments Coverage to help pay for some immediate bills, you will file a claim against the other party’s insurance when they are at-fault for the loss.

– How is property damage treated in no-fault states?

You might wonder how you’ll get your vehicle repaired if you live in a no-fault state and you don’t have physical damage insurance.

While many people think no-fault applies to every kind of claim, it actually only applies to injury claims. The fault is used to determine who is responsible for paying for repairs no matter what type of state you live in.

Is Colorado a no-fault state?

If you lived in Colorado before 2003, the answer to the question would be yes, Colorado is a no-fault state. Fast-forward to today, and that is not the case.

In 2003, the Mile High State abolished previous laws and went from operating under a no-fault system to a tort-based system. This change is why Colorado has what is referred to as a fault insurance requirement.

– Why did Colorado officials abolish the no-fault law?

There is no such thing as a pure no-fault system. If there were ever a pure system, that would prohibit injured parties from ever suing for their medical bills.

Colorado’s no-fault system was unique in the fact that people had a right to file a lawsuit against a negligent driver only after the Personal Injury Protection limits were exhausted and the injuries met the definition of moderate or severe.

Since insurers were always on the line to pay for what was considered reasonable medical expenses, operating in a no-fault state was risky for Colorado insurers.

The whole purpose of the system was to relieve the burden that auto accident claims put on the courts, but it wound up costing both drivers and insurers a lot of money because of exaggerated injury claims. To lower the average cost of insurance in Colorado, the state had to abolish the no-fault system.

– Has repealing the no-fault law been successful?

For 14 years, Colorado has been using the tort system practices. The purpose was to lower insurance costs, and data shows that the change has done just that.

According to the Insurance Research Council, a study shows that the amount of money paid per injury claim has dropped; in fact, companies report paying about 27 percent less in injury claim costs under the new tort jurisdiction.

– Who pays in a car accident?

Since Colorado is a fault state, it is the at-fault party who is responsible for paying for the injuries and the damages after they are more than 50 percent at fault for the accident.

Since auto insurance is required, the injured party will file a claim against your insurance for compensation.

– What happens if you don’t have enough coverage?

When you don’t have high enough limits in a no-fault state, you’ll have to find a way to pay for your remaining medical treatment. When you don’t have enough third-party coverage to pay for damages in an at-fault loss, you may face legal ramifications in court.

There’s a chance that being underinsured could lead to wage garnishments or asset liquidation.

Auto Insurance in Colorado

There is a mandatory auto insurance law in Colorado. At all times all vehicles must be insured with at least liability coverage. If a car does not have insurance but is registered, it is called an uninsured vehicle.

Here are the required limits and what the coverage will pay for:

• Bodily Injury Liability — $25,000 per person, up to $50,000 per occurrence to pay for medical bills and related expenses
• Property Damage Liability — $15,000 per accident to pay to repair other vehicles and other types of property

– Should you carry higher limits?

Carrying the state minimums might not have any consequences if you’re not in an accident, but you never know what can happen. Since Colorado is home to several storms every year, you need to have adequate coverage to protect your finances.

All experts recommend having at least 100/300/100 in liability coverage.

– Options for Additional Coverage

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You can also carry insurance that pays for your own losses if you’re willing to pay the premiums.

By law, the state requires insurers to offer you Medical Payments and Uninsured Motorist Protection.

Here are other forms of coverage that you can elect to add to your policy:

• Comprehensive
• Collision
• Rental car
• Roadside assistance
• Uninsured Motorist
• Medical Payments Coverage

– Penalties for Driving Without Insurance

The worst thing that could happen is that you could have an accident while you’re uninsured. Only second to that is the legal consequences for getting caught without auto insurance.

Here are some of the penalties you’ll face if you go even a short period without insurance in Colorado:

• Four points on your driving record (12 points in 12 months equals a suspension)
• A fine of at least $500
• Suspension of driver’s license until you can show proof of coverage
• A fine of at least $1000 for second offense
• A driver license suspension for 4 months
• Requirements to file an SR-22 for 3 years

Finding the Best Car Insurance Coverage in Colorado

It’s your duty as an insurance consumer in Colorado to find the best insurer to pay for protection. Your coverage isn’t any good if you do business with a company that isn’t reputable or honest.

Here are a few tips that will help you find the best policy possible:

– Compare Car Insurance Rates

You should never buy insurance from the first agent you get a quote from. Since rates can be dramatically different between carriers, you need to get quotes from several carriers before you are confident that you have found a good deal.

It’s recommended that you get at least four quotes every six months.

– Research the Financial Health of the Insurer

Companies that don’t charge enough money don’t have enough money to pay claims. That’s why there’s a fine line between a deal and a dangerously low premium.

You can avoid companies that are not financially healthy by researching financial strength. Many different agencies grade companies for their financial strength each year. Some sources include:

• AM Best
• Fitch Ratings
• Standard and Poor’s
• Moody’s
• Consumer Reports
• JD Power

– Ask for Available Discounts

In Colorado, there’s a long list of discounts that you may qualify for.

You should never overlook how much stacking your car insurance discounts can save you. Taking advantage of a handful of the following discounts could save you hundreds on your premiums every year:

• Multi-car
• Multi-line
• Good Student
• Good Driver
• Anti-theft
• Vehicle Recovery
• Driver Education
• Mature Driver
• Good Credit
• Low-mileage

Now that you know what type of insurance is required, it’s time to start shopping.

You could spend hours calling agent after agent to compare quotes, or you could get all of your quotes at once. Use an online comparison tool to request quotes in minutes, and you’ll find a great plan at a great price.

Try our FREE online quote tool and start comparison shopping for better auto insurance by entering your ZIP code below!