Question: My auto insurance representative told me to wait until my policy was renewed to do anything about the change in Colorado no-fault insurance. How will I know what to do then?
Answer: Everyone is asking the same question. I suggest that you get all of the information now that you need to make your decision. You might save a little if you decide to make a change now instead of in the future. Agents tend to talk fast and lump a lot of information into their discussions. Ask for answers in everyday terms and tell the agent you want the dollar amount for each change in your policy that you might want to make.
The issue that is new is paying for your medical expenses (and expenses of your passengers) if you are involved in an accident. If your injuries are covered by your health insurance, you won’t need additional coverage for yourself. But there may be people who ride with you on a fairly frequent basis who don’t have health insurance. If this is the case, you could increase your medical payments coverage to pay their expenses (and yours) up to the amount you decide. The Rocky Mountain Insurance Information Association says that the average personal injury protection, or PIP, claim for health expenses was about $7,800, and 96 percent of claims were under $25,000. I found that I could drop my PIP coverage and save $226 for a year and increase medical payments coverage for $25,000 per person for $8 per year.
What if there is an accident where you are at fault and cause injuries to people in the other car? This is another part of your auto insurance that you have always carried called bodily injury liability coverage. Liability insurance always covers other people when you are at fault. The required amount of bodily injury liability insurance in Colorado is $25,000 per person and $50,000 per accident. When Colorado switched from no-fault coverage to a tort (fault) insurance system, the doors were opened for injured persons to sue not only for medical expenses but for loss of wages and "pain and suffering." To date, only 10 percent of cases involve a lawsuit and most of those are settled out of court. But if you cause a terrible accident and find yourself in court, you could end up paying hundreds of thousands of dollars. This could cost you your home and all your savings. If you have significant assets, buy adequate liability insurance to cover this remote possibility.
I’ll talk more about liability insurance in my next column.