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Understanding Auto Insurance Policies

Understanding Automobile Insurance

Information about auto policies, coverage, deductibles, and costs.

In almost every state, not having automobile insurance is against the law. That is certainly the case in Colorado. It is illegal to register a vehicle without providing proof of insurance.  The penalty for driving without proof of insurance is $500 and four points on your license. A second offense will get you a $1000 fine and your license suspended for four months!

Minimum Liability Requirements

Different states have different liability minimums required for insurance coverage. The minimum liability requirements in Colorado are known as 25/50/15 and are as follows:

  • $25,000 per person for bodily injury
  • $50,000 per accident for bodily injury
  • $15,000 per accident for property

If you are leasing a car, or have taken a loan from a bank to purchase a car you will usually be required to carry additional coverage. This is known as “full coverage.” Full coverage means that not only does your insurance cover damage you cause to other people and property, but your insurance also covers your damages as well (usually in the event that you are at fault). Full coverage may cover other damage as well such as vandalism, your car being stolen, towing, glass, rentals and repairs. It is important to understand what is and is not covered when considering buying an insurance policy. Full coverage does not always mean everything!

Paying for Insurance

Auto insurance has two important terms to understand when estimating what your costs will be. The first is known as a premium. A premium is the amount of money you spend each month, quarter, or year to have your auto insurance.  If you pay $100 for your auto insurance every month, then your monthly premium is $100. Usually a car insurance company will offer you a discount if you pay multiple months in advance.  As long as you are paying your premium, you are covered by your auto insurance. It is important to note that if you miss a payment or are late with a payment your auto insurance may not cover you during those lapses.

The second insurance term you should understand is deductible. A deductible is the amount you agree to pay for damages before your insurance begins to pay. If you crack a windshield and your deductible is $500, you may find you are not covered for the $300 window replacement cost. Again, this is because the insurance will only pay for claims over $500. If you are in a serious accident and injure somebody who has bills totaling $20,000, you will be responsible for the first $500 of those bills and your insurance will cover the rest (within the terms of your policy).

What is an Insurance Policy?

The insurance policy itself is a document that clearly outlines what your coverage is depending on different scenarios. The policy will detail how much will be paid and to who in the event of an accident. It will also detail what you are responsible for and when. Your policy may cover medical claims for you, passengers in your car, and passengers in cars when you are at fault.

If you are in an auto accident and incur or cause damage to people or property, you should request the most up to date version of your insurance policy and consider discussing it with an insurance and auto accident attorney. You may find yourself involved in a lawsuit with people injured or people with property that has been damaged.

If you have been in a car accident and believe the insurance company is not paying what they have promised to pay in your policy, or according to what your agent has told you, contact Colorado auto accident attorney.

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