Dealing With Colorado’s At-Fault System

In 2003, Colorado, which had previously been a "no-fault" car insurance state, switched to a "tort-based" system. What does this mean for Colorado drivers and their car insurance costs? Well, in the past, Colorado enjoyed one of the most consumer-friendly car insurance systems; there was very little need for lawyers. The aftermath of accidents was handled by each individual’s car insurance company, regardless of which driver actually caused the accident.

In a no-fault system, each driver’s insurance company pays for their own injuries and damages, as per their individual policy. The various deductibles and pay-out limits are in effect, but basically you would be covered by your own car insurance. Under a pure tort system, sometimes referred to as a at-fault system, the car insurance policy of the driver who is ruled "at fault" must pay all of the damages. So what if you cause an accident? What will happen to you?

Having Adequate Coverage

Each state has legal minimums for bodily injury and property damage coverage. Colorado’s are 25/50/15. This means that for each accident, your car insurance company will pay up to $25,000 per injured person, up to $50,000 in total bodily injury, and $15,000 in property damage. Let’s say you rear-end another car. The driver reports $1,000 in bodily injury (whiplash, naturally), and $500 to fix his bumper. No problem - that’s far below your allowed $25,000 and $15,000 limits. Although your premiums may be raised because of the accident, you will suffer no immediate out-of-pocket losses.

Now for another example, let’s say that instead of a little fender bender, you miss a stop sign and completely mangle a flimsy little sports car with your big SUV. The poor driver breaks both his arms and both of his legs, as well as most of his ribs. His car is a total loss as well. Once you tack on physical therapy, his medical bills total $32,000, and the replacement cost of his car is $24,000. Your insurance company only pays $25,000 and $15,000. Who’s going to be responsible for the rest? You are!

Now how often are you going to cause such a terrible accident? Hopefully never. However, with the new tort-based system, increasing your coverage above the state minimums might be a good idea. Most people don’t consider themselves reckless drivers, and in reality, the likelihood that you’ll find yourself standing over the wreckage of a Bentley that you’ve mangled is pretty low. But there’s another factor to consider. Let’s call it sue-ability.

Can I Withstand a Lawsuit?

Most people of average income and financial stature are not very attractive candidates for a lawsuit. After all, in order for you to be worth the victim’s time, you have to have something worthwhile to take. But maybe you own a business, multiple pieces of real estate, lots of stock and bonds, or maybe you have a huge pile of cash in your bank account. If so, it’s a good idea to protect yourself and your assets. Speak to your car insurance agent and ask about the cost to raise your bodily injury and property damage coverages.

Many people are surprised at how much they’re paying when they look at rates from several different companies. Using the internet can show you the variety of prices offered. You may even be able to raise your bodily injury and property damage coverages without raising your premiums! You’ll never know until you research. Protect yourself and save money - how can you go wrong?