Since Colorado’s transition to an “at-fault” insurance state in 2003, drivers and passengers have more insurance options when injured in a car accident. Typically, a car insurance claim will start with a claim against the at-fault driver (who is backed by an insurance corporation). If the amount of insurance doesn’t cover the medical bills or it was an uninsured driver, the injured person may file an underinsured/ uninsured motorist claim with their own car insurance company – if they paid for this optional coverage. So let’s dive into the nitty-gritty of these insurance policies.
What is UM/UIM insurance? Talk to an insurance claims lawyer.
In the State of Colorado, all drivers are required to carry at least $25,000.00/$50,000.00 in legal liability insurance in case they injure someone or multiple people respectively in an accident. It is the bare minimum requirement, which likely doesn’t even begin to cover the costs of medical care in a catastrophic injury. Today’s medical care costs can easily rise into six-digits when an emergency room visit, medical specialists and injections are involved. That is where uninsured/ underinsured motorist coverage comes into play. UM/UIM coverage is the only way to ensure that you’re protected financially when an accident occurs, and the at-fault driver is woefully underinsured.
Uninsured motorist (UM) coverage: Protects you if the at-fault driver does not have any liability insurance. All drivers in Colorado are required by law to have minimum amounts of insurance, if not more. Yet, it is estimated that 16.2% percent of Colorado motorists are uninsured. So what happens then? If you have UM/UIM coverage, your own insurance company steps in and pays for the damages you incurred up to the UM/UIM policy limit purchased.
Underinsured motorist (UIM) coverage: Similar to UM coverage except that it applies when you have been injured by a driver who does not have enough insurance to compensate you for your damages. If the at-fault driver only has $25,000, and your injuries are more than that, then your own insurer stands in the shoes of the underinsured bad driver, compensating you for damages up to the amount of your UM/UIM policy limits. The more UM/UIM coverage you have on your policy, the more you are protected against drivers who are uninsured or underinsured.
Add in MedPay: Colorado requires auto insurers to offer drivers $5,000 in medical payment, or “MedPay,” coverage. While it’s not mandatory, MedPay coverage does provide funds if anyone is injured in a Colorado car accident, regardless of fault. We highly recommend MedPay, as this may offer peace of mind and protection in the early stages after an accident.
How to purchase UM/UIM insurance
It is not mandatory for Colorado motorists to carry UM/UIM coverage (it is considered optional insurance), but it is well worth the minimal additional cost. Under Colorado law, insurance companies selling automobile insurance in the state are required to sell Uninsured/Underinsured Motorist Insurance as part of every policy sold unless the coverage is specifically refused in writing.
Rejecting UM/UIM requires all “named insureds” to sign off in writing expressing the desire to reject this coverage. If “the named insured” has not signed the rejection form, or the insurance company has not retained the documents proving that the named insured rejected the coverage, Colorado law holds that $25,000 in minimum coverage is automatically provided.
When does UM/UIM coverage kick in?*
- The Obvious: If you are hit by a negligent driver with no insurance or very small coverage limits ($25,000), and you have serious injuries and physical impairments, UM/UIM coverage is applicable.
- Hit & Run: UM/UIM insurance can step in when you have car and medical bills after a driver leaves the scene of the accident. In the event that law enforcement solves the hit and run, the person responsible may face criminal charges in addition to liability for your car and medical bills.
- Passenger (not-at-fault vehicle): Passengers occupying a car with UM/UIM coverage are automatically considered eligible for UM/UIM on the car they are riding in even though they may not have purchased the coverage themselves.
- Passenger (at-fault vehicle): Reach and stack UIM benefits on top of liability benefits. The passenger in a car driven by a negligent driver can not only collect liability coverage from the driver’s policy, but would also be able to stack on top of that UIM coverage of that same policy.
- Passenger: Can reach UM/UIM through their own, uninvolved vehicles and stack it on top of any other already available coverages.
- Pedestrians: Can reach any UM/UIM coverage on any vehicle they own, even though the vehicle was not involved in the subject motor vehicle vs. pedestrian accident. So, even though their own vehicle was parked at home, the insurance on that vehicle may be used to assist them in their recovery.
- Drivers of company vehicles: An employee driving a company vehicle in the course/scope of employment at the time of an accident has three potential claims: 1) against the at-fault driver, 2) workers’ compensation claim and 3) UM/UIM coverage of the company vehicle.
- Resident relative: Uninsured motorist insurance coverage may be available to pay your claim if any resident in your household owns a car that has UM/UIM coverage regardless of whether you were occupying the car at the time of the accident.
*There are other scenarios where UM/UIM might kick in on a claim; the listing above is representative, not inclusive of all potential causes of action to trigger UM/UIM insurance benefits. Talk to an insurance claims lawyer at our offices to get more details.
Seems straightforward, right?
You paid for UM/UIM policy benefits; you should get those benefits in the case of a crash. The problem is that insurance corporations are worth billions of dollars for a reason: they often specialize in delaying or denying car insurance claims with their claims assessment software (Colossus, Outcome Advisor, Claims IQ, Decision Point, etc.). Thes big insurance corporations don’t look at the person, they look at the insurer-built computer programs to calibrate injuries. The flawed and faulty claim process minimizes the monetary value of peoples’ losses. It is the cold reality of the insurance conglomerates today… and is typically the start of a bad faith claim.
Bad faith lawsuits hold auto insurers accountable; unchecked these conglomerates put profits over people.
LEAD TRIAL ATTORNEY PETER M. ANDERSON
Insurance bad faith FAQ
Your insurance company — the company you have been dutifully paying every month to help you in this situation — does not honor its written contract. Even when filed properly and timely, insurance companies regularly dispute valid UM/UIM claims by intentionally low-balling the value to its policyholder. Usually, these disputes are over the amount that should be paid to adequately cover injuries - and the process can be drawn out with delay and deny tactics. This way, the insurer is pocketing the money for their corporation and its shareholders, instead of paying its insureds. Delay and deny tactics are at the heart of a bad faith claim.
File a breach of contract claim
The insured party would assert that he or she has satisfied all of the terms of the insurance contract (e.g., payment of premiums, providing documentation of loss, cooperating with the insurance company investigation, etc.) and that the insurance company has breached the insurance contract by failing to pay the valid claim. Under a claim for breach of contract, the insured party can recover the value of the insurance proceeds that have been denied by the insurance company.
File a common-law bad faith claim
In a common-law bad faith claim, the insured party shows that their own insurance company refused to make payment, acting with willful, wanton or reckless disregard for the truth.
File a statutory bad faith claim (unreasonable delay and deny)
The statutory basis for a bad faith legal claim simply states that an insurer may not unreasonably delay or deny payment for benefits. While the common law action requires an intentional or reckless disregard for the rights of the insured, Colorado statutory law requires only an unreasonable delay or denial of benefits.
Combining policies—known as “stacking” multiple policies onto multiple vehicles—is allowed. As of January 1, 2008 (DeHerrera case), Colorado insurance companies cannot include “anti-stacking” language in policies to prevent individuals from stacking, thereby reducing the total amount available. In other words, if you are paying premiums on three separate $100,000 UM/UIM policies, you may “stack” them for $300,000 in coverage total.
Colorado law prohibits a UM/UIM carrier from raising your insurance rates if you have been in an accident that is not your fault and you need to use your UM/UIM benefits. In other words, your UM/UIM carrier cannot penalize you for using your UM/UIM benefits.
What to do when the insurance company denies the claim
The insurance company wants to pay as little as possible using common delay and deny tactics. Eventually, they may offer a low-ball settlement offer that barely covers outstanding medical bills. This is where an experienced insurance claims lawyer can help – navigating the complex process of getting insurers to fairly value injuries and provide the full extent of UM/UIM policy benefits.
Both Peter Anderson and Carlo Bonavita have tenure in this field: Peter was an insurance claims adjuster/claims manager before working at a prestigious defense firm in Boston, while Carlo comes directly from a defense firm understanding both the mentality and mind frame in which insurers value cases. Our firm puts this knowledge and expertise to work in bad faith insurance cases. Contact us today at 303-444-1505 with your questions; we are here to help.
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