Auto insurance is the agreement between you and the insurance carrier that helps protect you against financial loss in the event of an claim. The exchange between you and the insurance company, meaning that because you pay your annual (or any other agreed upon payment plan), the insurance carrier will cover specified losses either to you or to your injured party.
The minimum coverages for Colorado are $25,000 for Bodily Injury, $50,000 per accident and $15,000 for property damage.
Liability - Coverage in the event that another party is injured or damage is done to their property.
Bodily Injury (BI) Liability Limit – This is the maximum that the policy will pay out regardless of how many people are injured.
Property Damage (PD) Liability Limit
This is the limit of coverage to be paid out for the damage done to another's property. The value of the property is generally determined by book value or market value.
Minimum vs. Adequate limits – Every state has a set minimum liability limit for the coverage required to register a vehicle. Colorado is 25/50/15. If the coverage is not enough to a vehicle owner must have in order to register the vehicle. However, when this coverage is not enough to pay the injured party for the damages incurred, it is sometimes decided in a court of law as to how the remaining monies owed will be paid. Bankruptcy is generally not an option.
Medical Payments – This coverage is a no-fault coverage and generally is paid to any occupants in your vehicle who are injured, up to the policy limits.
Uninsured/Uninsured Motorist Coverage – This coverage can be purchased to protect you from drivers who are under insured and uninsured. This does not include hit and run situations.
Damage to Your Auto – Coverage that can be purchased and is only required when a loan is being carried by a lender. This coverage is also known as "Physical damage" or "Full coverages". These coverages are generally listed on your policy as Collision or Comprehensive (Other than collision). This coverage, when purchased, would pay for repairs to your vehicle in the event of an accident, up to the value of the vehicle. In most cases, once the damages reach a maximimum level (70 - 75 %) of the value of the vehicle then the vehicle is considered "totallled" and the market value is paid to the owner.
Additional Coverages – Your agent can help you with other coverages that are available on the auto policy such as roadside assistance, rental car coverage, rideshare coverage, custom equipment, and new car replacement.
Custom Equipment - Equipment that was not on the vehicle at the purchase time from the original manufacturer. If you buy a new vehicle it is important to know if the dealer customized the vehicle in any way. If you do not share this information with your agent, you may not have adequate coverage on your vehicle.