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Are You Underinsured?

Richard Gama July 20, 2017

Most of my day as a personal injury lawyer involves negotiating (ok sometimes arguing) with car insurance companies. So many people would assume that I don’t like them, but in fact, I think they perform a very necessary and helpful service to our society. Car insurance pays you and others for medical bills, pain and suffering, car repairs, and even lost work due to injuries. Car insurance defends you against attorneys like me. Car insurance shields your personal assets (like cars, homes, paychecks, and bank accounts) from having to be seized in a personal injury lawsuit.

But before you can determine how much insurance you need, it might be helpful to consider some of the most common medical costs that people in Colorado can incur after an accident:

  • an Emergency Room bill can easily reach $5,000 or more for a single visit;

  • an ambulance bill is typically about $1,000;

  • physical therapy and/or chiropractic treatments can cost several thousand dollars each, depending on how often you go;

  • MRIs are about $1,000 per area of the body;

  • steroidal injections for neck or back pain can easily cost $10,000-$15,000; and

  • neck or back surgeries are well over $50,000.

So if you only carry the Colorado minimum-required coverage of $25,000, it’s easy to see how this can get eaten up pretty quickly, leaving you personally responsible for the rest.

Before you call up your insurance agent though, let’s make sure you’re familiar with the different types of coverage available to you in Colorado:

“Collision” and “Comprehensive” Coverage:

This type of coverage pays for car repairs after an accident (“collision”) or after something other than an accident (“comprehensive”) like fire, theft, vandalism, or “acts of God” (think earthquakes, hail storms, and even the occasional Sharknado).

“Medical Payment” (aka “Med Pay”) Coverage:

This type of coverage is optional and pays you or a passenger for any out-of-pocket expenses related to medical treatment. If you don’t have health insurance, this coverage can come in pretty handy. You can use it to pay hospitals and doctors, or reimburse yourself for prior payments. Even if you do have health insurance, this coverage can be used to pay for things like your health insurance deductibles and co-pays, or out-of-network providers that may not be covered by your health insurance. This coverage does not pay for things like pain, emotional suffering, lost enjoyment of life, or lost wages due to an injury, but it does pay right away (instead of having to wait several months or longer to resolve claims for the two types of coverage described below).

“Bodily Injury Liability” (aka “Liability”) coverage:

Colorado requires drivers to have at least $25,000 of Liability coverage on their car policy (although many drivers ignore this law and don’t have any insurance – see data below). This coverage pays for someone else’s medical bills, pain, suffering, lost enjoyment of life, lost wages, etc., when you cause an accident and it’s your fault. This coverage helps protect your personal assets (such as your home, car, paychecks, savings accounts, etc.) from being seized in a lawsuit to pay for the injured victim’s losses.

“Uninsured / Underinsured Motorist” coverage:

This type of coverage is optional but extremely important. It pays you, any resident relative, or any passenger in the event that: 1) you are injured in an accident that is not your fault; and 2) the at-fault driver either has no “Liability” insurance or not enough “Liability” insurance to cover all of your medical bills, pain, suffering, lost wages, etc. This coverage is so important because of how many drivers on the road with either no insurance or a minimum $25,000 policy.

Nearly one out of six motorists in Colorado was driving without auto insurance coverage in 2012, the ninth-worst ratio in the country, according to a report from the Insurance Research Council. That works out to 16.2 percent of drivers in the State, or nearly 600,000 motorists who probably can't pay for your injuries if they crash into you.

I’m not going to tell you how much insurance you need; that depends on so many variables like how much you can afford, how many assets you have to protect, how much protection you feel comfortable with, etc. But if you want to discuss your options with someone who regularly sees how far insurance coverage goes (or doesn’t go) in real world scenarios, feel free to give Gama Law Firm a call and speak with me directly. And if you want to learn more about Uninsured Coverage specifically, you can read our other article here: Underinsured / Uninsured Accidents

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