Understanding Car Insurance Coverage Types

cars involved in an accident

When a car accident happens, figuring out all the different insurances involved can seem overwhelming. That is because there are different insurance coverages, or protections, owed to the driver, the passengers, and even the at-fault driver who caused the whole mess.  We at Chris Parks Law have put this guide together to simplify what insurance may be available for different losses.  As this is just a guide, and facts always affect insurance coverage, please give us a call if you have questions about your specific situation.

Assume you, Diligent Deens, are sitting at a stop light waiting for a red light to turn green.  Your friend, Friendly Fred, is sitting next to you in the front passenger seat.  Out of nowhere, boom!  You are hit from behind by Reckless Rick.  In this situation, there may be several different insurance coverages, or insurance benefits, available to you, Friendly Fred, and Reckless Rick under all three of your car policies.    

If you pay for insurance on the car you are driving, then you could have paid for first-party coverage, such as medical payments insurance (“medpay” for short),or uninsured/underinsured motorist insurance (UM/UIM for short).  These are optional coverages or protections from your car insurance policy which could cover your and your passenger, Friendly Fred’s, medical costs, lost wages, pain and suffering, and more, regardless of whether Reckless Rick has insurance or not. 

Medpay covers the costs of medical expenses when a car accident results in injuries to an insured, his or her passengers, or other drivers listed on the policy. This coverage can be used after any accident to pay for medical costs, regardless of fault. Medpay costs very little, usually around $10 per month. In return, it usually provides coverage for reasonable and necessary medical treatment in increments of $5,000.      

Friendly Fred, your passenger, is entitled to use your med pay insurance for his reasonable and necessary medical care.  In addition, Friendly Fred might have his own pot of med pay money if he bought that coverage under his own car policy.  

The other first-party insurance that might help you and Friendly Fred is UM/UIM insurance. UM (uninsured motorist insurance) pays for your medical and property damages when an uninsured driver, or someone with no insurance, is at-fault in an accident that you’re involved in. UIM (underinsured motorist insurance) covers you if the at-fault driver has some liability insurance (say $25,000 per person which is the minimum for all drivers under Colorado law), but not enough to cover all your losses. With the high cost of medical treatment, including ambulance rides, ERs, MRIs, etc., $25,000 of the at-fault driver’s liability coverage could go awfully fast.  Thus, having your own UM/UIM coverage is very important.

Say the at-fault driver, Reckless Rick, was insured with liability coverage. Liability coverage is owed not to the policyholder, Rick, but to third parties like you and your passenger, Friendly Fred.  Liability insurance consists of both a bodily injury and property damage component.  Bodily injury coverage (which is at least $25,000 per person in Colorado) pays for the victim’s pain, anxiety, loss of enjoyment of life, and economic losses like lost wages and medical bills.  Assuming Reckless Rick had a $25,000 per person/$50,000 per accident liability policy, which is the Colorado minimum, both you and your passenger Friendly Fred would have access to $25,000 each for your respective bodily injury losses. Property damage coverage (which is usually only$15,000 for Colorado minimum-coverage policies) pays for repair costs for your car, as well as other stationary objects like a broken fence that might have been damaged in the accident.    

As you can see, there are many moving parts to insurance applicable to car accidents. We understand that all of this can quickly become confusing, so if you have any questions, please give us a call. We are happy to chat and give you some peace of mind in understanding the sometimes-complicated process of being in a car accident.








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