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Colorado Insurance Blog

What is Uninsured Motorist Coverage?

Uninsured Motorist coverage pays for expenses incurred if you’re injured in an accident caused by a driver that is uninsured. It’s generally coupled with Underinsured Motorist coverage, which pays for the same expenses but if the driver is considered underinsured, meaning their liability limits are lower than your chosen Underinsured Motorist limits. Those coverages together are often referred to at UM/UIM coverage.

Are you required to have Uninsured Motorist coverage?

Uninsured Motorist coverage is required in Colorado unless a signed rejection form is signed. You also have to sign a form if you elect to have your Uninsured Motorist limits lower than your liability limits.

So technically, no. You don’t have to have Uninsured Motorist coverage. But it’s recommended and you have to waive and sign away the rights to the coverage if you don’t want it.

If you choose to reject or lower your UM/UIM coverage but you don’t return the signed form in a timely fashion, the insurance company will add that coverage back to the policy and add the premium to your bills. That’s because insurance companies are required by Colorado law to either provide the coverage or retain a signed rejection or coverage selection form.

Who does it cover?

  • Drivers on the policy
  • Family members who live in the household
  • Passengers riding with an insured driver

Why is Uninsured Motorist coverage important?

In 2019, more than 16% of drivers in Colorado were uninsured. That means about 1 in every 6 drivers was driving with no insurance. If one of those drivers were to cause an accident and you, a family member, or a passenger were injured, they would have no coverage to pay for your medical bills, let alone any other expenses you might incur.

Coverage for things health insurance won’t cover

Many people assume they don’t need UM/UIM coverage because they have health insurance. While health insurance may help pay some of the bills, I wouldn’t put all of my eggs in that basket. For one, health insurance has limits of what they will cover and what is considered “in network.” If your ambulance ride or ER doctor isn’t in your network, you could be left covering that whole bill yourself.

Even if your health insurance does cover your medical bills, you’re still responsible for your health insurance deductible. With the rising costs of health insurance, many people are choosing higher deductible plans. That could leave you paying the first $5-10K out-of-pocket before you see your health insurance provider pick up the bill.

There are also some things that health insurance is never going to cover, like your lost wages, funeral expenses, or pain and suffering. Those are all things that Uninsured or Underinsured Motorist coverage can help pay for. If someone loses their life in an accident with an uninsured or underinsured driver, or if they’re out of work for a period of time while recovering, UM/UIM coverage can step in and relieve the financial stress.

Read more in our blog Do I Need Uninsured Motorist Coverage If I Have Health Insurance?

You may not know what insurance your passengers have

Do you ask everyone that gets in your car what health insurance they have? My guess is no.

You might let a coworker ride with you to lunch one day, carpool with a cousin to a wedding, or pick up your kids friends from soccer practice. All of those passengers would be covered by your UM/UIM coverage. Without knowing what health insurance they have (if any) or what their deductible is, you’re taking a gamble with their financial future if you don’t have Uninsured Motorist coverage to help protect them.

Not only that, but your passengers may not be able to afford being out of work for an extended period of time if they are injured in an accident. Your UM/UIM coverage can go a long way in helping them get back on their feet.

Who do you or your family members ride with?

Your Uninsured Motorist coverage also follows you and your household members when you’re a passenger in other cars. I know I don’t ask people what coverage they have on their car insurance policy before I get in the car with them, so I feel more comfortable knowing that I at least have coverage for the limits I chose for my family.

Uninsured Motorist vs Underinsured Motorist

You’ll have the same limit for both coverages, but they each have a specific scenario for when they will kick in.

Uninsured Motorist coverage extends when a covered person is injured in an accident that is caused by a driver with absolutely no liability insurance.

Example:

Sally had $100K in medical bills from an accident caused by Bob. Sally’s UM limits were 100/300 ($100K/person and $300K/accident), but Bob didn’t have any auto insurance. Since Bob doesn’t have liability coverage to pay for her bills, Sally’s policy would step in and pay the full $100K. If Sally didn’t have UM coverage, she would have to pay out-of-pocket or sue Bob for the damages.

Underinsured Motorist coverage extends when a covered person is injured in an accident that is caused by a driver whose bodily injury liability limits are lower than the covered person’s selected Underinsured Motorist limits.

Example:

Mary had $100K in medical bills from an accident caused by Jim. Mary’s UIM limits were 100/300 ($100K/person and $300K/accident), but Jim’s liability limits were only 25/50 ($25K/person and $50K/accident). Jim’s policy would only pay up to $25K of her medical bills because that is the per person limit. Since Mary’s UIM limits were higher than Jim’s liability limits, her policy would step in to pay the rest of the $75K of medical bills.

Why Renter’s Insurance Makes Sense for You

Renters insurance is one of the least understood coverage options on the market. We at Integrity First Insurance find that many Colorado renters don’t even buy a policy unless their landlord demands it. Is this a wise decision? Absolutely not! That’s because your policy can cover a surprising range of situations and help to keep you protected from the dangers that you may experience otherwise.

How Renters Insurance Helps You

Renters insurance is a lot like a home insurance policy but is designed for people who do not own the home. So whether you rent a house or an apartment, you can get protected. It typically works to protect your belongings, while the landlord’s home insurance policy covers the structure. Typically, it:

  • Protects from damage, like fire, water problems, failing items, and smoke issues
  • Insures you against snow, sleet, lightning, windstorms, hail, and even ice-related problems
  • Covers you against vandalism, riots, vehicle damage, and theft against your property
  • Pays relocation costs or living expenses while your home is being repaired
  • Helps to pay other related issues that may occur on your property

For more information about what renters insurance covers, read our blog Renters Insurance 101

You can also expand your policy to cover things like expensive coin collections, business elements contained within your property, credit cards, travelers’ checks, stamps, jewelry, furs, firearms, and much more. Your policy will cover what you want as long as you expand it to cover your needs.

Do You Have Enough Coverage For Your Belongings?

Don’t Let Your Property Get Damaged

If you’re worried about the potential dangers that could impact your rented home and need renters insurance, please contact us at Integrity First Insurance to get help. We serve Colorado and provide the kind of renters insurance that you need to stay on top of your financial situation.

When is a Car Considered Totaled?

The short answer is that a car is considered a total loss when the cost to repair the vehicle is more than the vehicle is worth. The exact requirements for totaling a car can vary in each state, but the general guidelines are consistent.

Let’s explore how/when a car is considered totaled and what that means for the car and insurance.

Salvage Vehicles in Colorado:

According to the Colorado DMV, a car is considered a total loss when “the cost of repairing the vehicle to a roadworthy condition and for legal operation on the highways exceeds the vehicle’s retail fair market value immediately prior to such damage.”

To be considered a salvage vehicle, it must be damaged by collision, fire, flood, accident, trespass, or other occurrence, excluding hail damage. Hail damage alone doesn’t result in a salvage title in Colorado since the car is still considered roadworthy.

Once a car qualifies as a salvage vehicle, the owner must surrender the title to the DMV to get a salvage title. On the salvage title application, the owner must disclose the type of damage that resulted in the salvage vehicle.

What factors do insurance companies consider when determining if a car is a total loss?

Insurance companies look at a combination of the following factors:

  • The damage to the vehicle
  • The current value of the vehicle (immediately prior to the loss)
  • The vehicle’s salvage value
  • State rules and regulations
  • Availability and accessibility of replacement parts
  • The ability of the damage to be repaired to roadworthy condition
  • The length of time it’ll take for repairs
  • The potential for hidden damage

If you’re in an accident and the other driver was at-fault, their liability insurance will pay to repair your vehicle. In a case where the cost to repair your car is more than the car is worth, the insurance company can declare your car a total loss and pay out the actual cash value of your car.

In an accident where you were at-fault and have collision coverage on the vehicle, then your insurance policy will cover the damage to you car. And if it’s something other than an accident that causes damage, like hail, vandalism, or flooding, you’d need to have comprehensive coverage on the car for your policy to pay for the repairs. When it’s your collision or comprehensive coverage paying out, the settlement will be the actual cash value, less your chosen deductible.

Actual Cash Value: The market value of the car, or what someone else in your area would reasonably pay for the same car. It’s essentially the replacement cost minus depreciation for age and wear and tear.

What happens if a car is declared a total loss?

You can release the car to the insurance company and accept the actual cash value, or keep the car and take a lesser payment. If you choose to keep the vehicle, the insurance company will subtract the salvage value from the settlement offer and you’ll be given the difference. Essentially you buy back the salvage title.

If the insurance company was providing you with a rental car, there is generally a limit of time they will continue to provide the rental after informing you that your car is a total loss. Many companies will pay for the rental car for another 2-5 days, after that you would have to return the rental car or pay out of pocket.

What if I have a loan on my car that is totaled?

Unless you have purchased additional coverage, the presence of a loan or lease on your car doesn’t impact the claim payout offered. If you owe more than what the car is worth, you could end up paying the difference out-of-pocket.

If you have Gap coverage on your policy, your insurance company will pay the difference between the car’s value and what you owe on your loan or lease. I highly recommend Gap coverage for any car that has a loan or a lease.

How is the value of my car determined?

Any or all of the following details can determine the actual cash value of a vehicle:

  • Make
  • Model
  • Year
  • Mileage
  • Condition
  • Upgrades
  • Local Market

Can I insure a salvage title vehicle?

Yes, there are options available for insuring a vehicle that has been deemed a total loss. Each insurance carrier has their own guidelines when it comes to insuring salvage vehicles, and some won’t insure them at all. But there are carriers that will offer coverage, though it might be limited, for a totaled vehicle.

Some insurance companies will allow you to keep comprehensive and collision coverage on a previously totaled vehicle, but the payout for any claim would take into account the damage to the car. Other companies will only allow you to carry liability coverage on a salvage title car.

In Colorado, hail damage alone doesn’t require a salvage title, but insurance companies can still limit the coverage they provide based on the previous damage. Since hail damage is generally cosmetic and doesn’t often impact the safety of the vehicle, it’s easier to find coverage for a car that was totaled from hail damage as opposed to an accident.

The best way to get the coverage you want on a vehicle that has been totaled is to work with an insurance broker, like Integrity First. We work with many different insurance companies, so we can find a fit for the coverage you need. Give us a call today if you have questions about a salvage vehicle or want to get a quote.

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