Colorado changed its laws covering automobile insurance on July 1, 2003. As a result, people are asking if they need to continue their personal injury protection (PIP – no-fault) coverage. The PIP portion of your vehicle insurance covered the medical expenses of a driver and his or her passengers without regard to who caused the accident. If you and the people who ride with you have health insurance that covers injuries, you may not want or need PIP coverage. Be sure to check with your health insurance company before dropping PIP.
When I checked with my insurance company, I found that I would save $226 per year by dropping the PIP coverage, and for only $8 per year I could add $25,000 per person (myself and my passengers) in coverage for medical bills.
More important now is your liability coverage. Do you have enough liability insurance to cover property damage and medical expenses, including "pain and suffering," if you cause an accident? The mandated amount of liability insurance for Colorado is $25,000 per person/$50,000 total per accident. But if someone sues you for $500,000 or more, that amount of insurance would be woefully low and the rest would come out of your savings.
If you insure your home and your vehicles with the same insurance company, ask about an umbrella liability policy. This policy goes beyond the liability coverage you already have in your auto and homeowner’s policies. Let’s say you have $25,000 liability insurance with your automobile policy and $300,000 liability insurance with your homeowners’ policy. It might cost another $350 per year to add liability coverage of $1 million per person/$5 million per accident. In other words, people with significant assets could initiate this type of policy and then not worry about a catastrophic financial crisis.
This would be a good time to compare insurance policies and rates. Always get quotes from at least three insurance agencies and make sure you ask about similar coverage.
If you would like to learn more about automobile insurance, check out the Colorado Division of Insurance Web site at www.dora.state.co.us/insurance. You also can get good information at the Rocky Mountain Insurance Information Association Web site at http://www.rmiia.org/.