I’ve had numerous calls from people with questions and stories about their own experiences in changing their vehicle insurance. People are finding that a change to one section of their policy affects another section. Let’s "deconfuse" the sections of your policy.
When you purchase vehicle insurance, you receive protection against three types of possible problems: a) your injuries (and those of your passengers) related to an accident, b) damage to your vehicle, and c) injuries to other people and to their vehicles if you cause an accident. This last part is called liability insurance. Colorado law requires that you carry a minimum of $25,000 per person for bodily injury with a maximum of $50,000 per accident and $15,000 per accident for property damage.
Coverage for your injuries and for your passengers has been covered in the past by the personal injury protection (PIP, referred to as no-fault). When your vehicle insurance is renewed or if you decide to change it now, the PIP coverage will no longer be available. Your choices will include medical payments coverage for you and your passengers and uninsured motorists’ coverage.
Before you make a decision about covering your potential injuries with your automobile policy, check with your health insurance. Is there a deductible in your health insurance coverage related to automobile accidents? Is there a lifetime maximum coverage that you might exceed? If you are covered by your health insurance, you’ll need to think about your passengers. Do they have adequate health insurance? If not, you’ll want to purchase medical payments coverage. There are different levels of coverage. You might elect $10,000 per person or, for a slightly higher premium, $25,000 per person.
Do you need uninsured motorists’ coverage? This also covers bodily injury to you and your passengers if you are in an accident caused by another driver. The issues are the same ones as above – how will your health insurance cover you and what kind of coverage do your passengers have?
The other sections of your policy – collision and comprehensive – cover damage to your vehicle. While you are asking questions about coverage for bodily injury, ask about raising your collision and comprehensive deductibles from $100 per event to $500 or even $1,000.
As you make changes, you may find that the discounts you receive are lowered, which may make your premiums higher than you expect.
Each year the Colorado Division of Insurance compares premiums for auto insurance in Colorado. The information is summarized and presented so that you can make comparisons with your existing insurance rates. The most recent survey was published in December 2002 and still includes PIP coverage. Because you are unlikely to exactly fit into one of the categories, this is where you collect baseline information and then do your own surveying by contacting three insurance companies and comparing their quotes for your situation.
You can get a copy of the guide by sending a self-addressed envelope to Auto Brochure, Colorado Division of Insurance, 1560 Broadway, Suite 850, Denver, CO 80202. You can also get a copy at their Web site: www.dora.state.co.us/insurance.
by Judy McKenna, Ph.D., CFP, Family Economics Specialist, Colorado State University, Cooperative Extension, firstname.lastname@example.org, 491-5772