Colorado changed the insurance laws regarding personal injury protection in 2003. The information below describes in detail the changes to the laws and how it affects you the consumer. Click on one of the links below for more information on each of the topics.
- When the new law went into effect
- Personal Injury Protection (PIP)
- What happens under the new system
- What is Med Pay
- No fault coverage
- Renewing your policy
- Uninsured/Underinsured Motorist Coverage
- Out of Pocket Expenses
- Stacking Coverage
The Underinsured Colorado Tort Law
When the new law goes into effect:
Effective July 1, 2003, Colorado converted from a no-fault auto insurance system to a tort system. Auto insurance policies contain several components. Personal Injury Protection, or “PIP”, is coverage provided by the no-fault law that was repealed, and is no longer required after July 1, 2003. PIP pays for a person’s injuries sustained in an accident, regardless of who was at fault (hence the term “no-fault”). This was one of the more expensive portions of an auto insurance policy, and it was claimed that its elimination would result in lower overall premiums for most motorists.
Personal Injury Protection:
Since PIP is no longer required, most insurance companies raised their premiums on two other coverages contained in their policies: bodily injury (“BI”) liability and uninsured/underinsured motorist (“UM/UIM”) coverage. This increased coverage is necessary because where PIP policies pay for the cost of medical treatment for most injuries sustained in an auto accident, many claims for medical treatment under tort policies will eventually be paid only when the BI or UM/UIM claim is settled.
What happens under the new system:
Under this new system, if you injure someone in an accident, his or her medical bills likely will be paid by your BI liability coverage, but only when the entire claim is resolved, since insurance companies typically won’t front money for expenses. Therefore, it is important that you choose the appropriate level of coverage for your individual financial situation. For example, if you have assets worth $300,000, the state minimum required liability insurance ($25,000 per individual with a $50,000 maximum per accident) is not sufficient to protect you. As with the old law, an injured motorist can sue you for the cost of the medical treatment they get, along with pain and suffering as well as actual damages.
What Med Pay is:
Med Pay is a type of insurance that provides benefits for payment of medical treatment to you and injured passengers in your vehicle regardless of fault, but usually with much lower medical coverage limits and fewer other benefits than the old PIP law required. While this may be a coverage you wish to purchase, first check to see if your health insurance will pay your medical bills sustained in an auto accident. Many consumers have purchased medical payments coverage to provide coverage to their passengers who may or may not be covered by their own health insurance policies. If you do not have health insurance, then you should consider purchasing Med Pay coverage. Most, if not all, self-funded health insurance plans issued through labor unions are planning to exclude treatment for injuries sustained in auto accidents.
No Fault Insurance:
For 30 years, Colorado has been a “No Fault” auto insurance state. This means that if you were hurt in an automobile accident, your own insurance or the insurance on the car you were in paid for your medical care regardless of who was at fault. The old No Fault package provided up to $100,000 in medical and rehabilitation benefits. After July 1, 2003, auto insurance policies are no longer required to provide No Fault benefits. You will now have to prove that you were not at fault and attempt to collect money from the person at fault or their insurance company to pay for your treatment. They will only pay for it when they settle or resolve the whole claim. In the mean time you need to get treated.
Renewing your policy:
What happens if I have not yet renewed my policy or changed it and I am hurt in an auto accident after July 1, 2003?
If you are hurt in a car accident after July 1, 2003 and have not yet renewed your policy or changed it, you will still have No Fault benefits to pay for your treatment.
What type of auto insurance should I buy after July 1, 2003?
If you have separate medical insurance through your employer or that you purchased individually, you will need to check your medical insurance plan to see what type of treatment is covered. Most private medical insurance policies do not cover many types of treatment that people want to receive for their injuries that result from automobile injuries. Chiropractic treatment, physical therapy, massage therapy and acupuncture has been shown in numerous studies to be effective treatment approaches for most forms of injuries to the neck and back. Yet, very few private medical insurance companies pay for these forms of treatment. If you are hurt in an auto accident and your medical insurance will not cover the treatment you want, you will either have to pay at the time of service or if your health care provider is willing, sign a lien against any payment received from the other driver at fault.
Most auto insurance companies will be offering a “Med-Pay” benefit. This will work much like the old No Fault benefits. If you are hurt in an auto accident and had purchased Med-Pay benefits, your own auto insurance company will pay for your treatment. Many Med-Pay policies, however, will not offer $100,000 in medical benefits as the previous PIP policies were required to do. If you do not have separate medical insurance or if your medical insurance company does not cover chiropractic, physical therapy, massage therapy and acupuncture treatment, you should purchase Med-Pay auto insurance benefits for limits of at least $25,000 or the most offered if your insurance company does not offer this much in benefits.
Should I make any other changes to my auto insurance policy?
Yes. If you do not have at least $100,000 in per person bodily injury liability (BI) coverage, you should increase your BI limits to $100,000 per person.
Under the No Fault system, if you were at fault in an automobile accident and injured a person, the injured person’s No Fault insurance company paid for that person’s treatment. The victim could not sue you or ask your insurance company to pay for their health care up to $100,000 in treatment. If you had the minimum liability policy, you had $25,000 of coverage to pay for the other person’s damages that were not paid by their own No Fault benefits such as the person’s pain and suffering. In other words, there was a total of $125,000 to pay for treatment and other damages to the victim of an auto accident. After July 1, 2003, a person hurt in an auto accident is to sue the party at fault for all of their treatment expenses, loss of income, pain and suffering and other damages. In many cases, a liability insurance limit of only $25,000 will be not enough money to compensate the injured party. For example, if you were at fault in a car accident, injured another and the injured person received $40,000 in treatment, they may have a claim against you for much more than your liability limits, if your limits are twenty five thousand dollars. If that person’s claim is worth $100,000 total and you only had $25,000 in liability coverage, you will be personally responsible for the difference of $75,000. You could lose most of everything you own. Therefore, you should purchase at least $100,000 in bodily injury liability coverage.
Uninsured and Underinsured Motorist Coverage:
In addition, you should also increase your uninsured/underinsured motorist (UM) coverage to at least $100,000 in per person benefits. If you are hurt by an at fault driver and that driver has no auto insurance or has inadequate liability coverage, you will have to try to collect money from the party at fault including the cost of your medical care. Many times this is quite difficult or impossible. Some negligent motorists declare bankruptcy. Others have no assets and very little income so that collection from them is impossible. Your own auto insurance provides uninsured motorist or “UM” coverage for your protection. If you are hurt by an at fault driver who has no auto insurance, you may collect your damages from your uninsured motorist benefits. If the at fault driver has only $25,000 in bodily injury liability coverage and your claim is worth much more, you may collect the difference between the negligent party’s liability policy limits and your total damages from your UM coverage. For example, if your treatment bills totaled $50,000 and the rest of your liability claim was worth another $50,000 (lost wages, pain and suffering, disfigurement, etc.), and the at fault driver had $25,000 in liability limits, you would be able to collect the $25,000 liability limits from the at fault driver’s insurance and also an additional $75,000 in underinsured motorist benefits from your own policy. You will not have to worry about trying to collect $75,000 from the party-at-fault’s personal assets or not collect at all because they have no money or property.
Out of pocket expenses:
What happens if you have no medical or health insurance to pay for treatment, did not purchase Med-Pay auto insurance benefits or were at fault in an auto accident?
You must pay for your treatment out of your own pocket. If you cannot afford to pay for your treatment and if you qualify for indigent care, you will have to go to a state or city hospital and try to get treatment. If you are not suffering from a life-threatening injury, it will be very difficult or impossible to get treatment. If you were not at fault for the accident, you need to find doctors who will work with your lawyer to get you evaluated and treated. MINTZ LAW FIRM has worked out arrangements with doctors so that they will wait for payment until your claim is resolved and you can get treated without any out of pocket expense. You must protect yourself. The majority of people should buy as much Med-Pay insurance available and also increase their BI and UM limits to at least $100,000 in per person coverage. If you have any questions about this, please contact your health care provider for further information.