Auto insurance requirements in Colorado

Colorado requires all motorists to carry car insurance. Furthermore, proof of this coverage must be kept with you at all times while driving and must be shown to a law enforcement official at their request. Not carrying the required coverage puts you and other drivers at risk and can also lead to severe penalties.

Read our guide to find out more about insurance options and required coverages in the state of Colorado.

The above requirements are imposed by Colorado, though a lender or leasing company could require additional coverage in an effort to protect their investment and shield your vehicle against physical damage. This is commonly known as full coverage. 

Liability coverage in Colorado

Liability coverage is a legally required auto coverage in Colorado that goes toward paying for bodily injuries and property damage that you cause in an at-fault accident. This coverage also steps in to cover the injured party’s pain and suffering as well as their lost wages. Please note that your own liability coverage only ever pays others and will never cover your injuries or any damages to your own property.

What are state-mandated car insurance limits?

An insurance limit is the maximum that a car insurance company will pay in the event of a claim. Liability coverage limits are determined at the state level and are typically split into three categories: bodily injury per person, bodily injury per accident, and property damage. In Colorado, the minimum is listed as 25/50/15. If you decide to carry the minimum liability coverage, the following amounts are the most that your insurance company will pay:

• $25,000 in bodily injury coverage per person is the maximum amount an insurer will pay for injuries you cause to a single person in an auto accident.
• $50,000 in bodily injury coverage per accident is the total amount that can be paid for all injuries that you cause in an accident in which more than one person is hurt.
• $15,000 in property damage per accident is the maximum dollar amount that your insurance company will pay for damage that you cause in an accident.

Do Colorado’s required minimums provide enough coverage?

Insurance mandates in Colorado are roughly on par with those in most other states. Still, the bare minimum coverage is not recommended as it does not go very far in protecting you or your assets. Unfortunately, emergency care costs can cause your liability limits to evaporate quickly, especially if you injure multiple people. Likewise, the $15,000 property damage limit is substantially lower than the average cost of a new vehicle. 

Regarding your own, Colorado requires no coverage at all. As such, if you want to keep yourself fully protected, you should look into adding extra coverage and increasing your current liability limits.

Colorado’s penalties for driving without proof of insurance

Colorado takes uninsured driving very seriously. If found guilty of driving with no insurance in Colorado, you can expect the following penalties to apply:

• Four points added to your driver license
• First offense: Minimum $500 fine and license suspension until you can show proof of insurance
• Second offense: Minimum $1,000 fine and a four-month license suspension
• Third and subsequent offenses: Minimum $1,000 fine and an eight-month license suspension
• Up to 40 hours community service could be added to the above penalties

Optional car insurance coverage types in Colorado

Colorado law requires only liability coverage in order to be legal in the state. However, most insurance companies offer a wide range of other coverages that can further protect you and your assets. Some of the more common options available include the following:

• Comprehensive: A coverage that pays for vehicle damages caused in non-collision circumstances such as theft or weather-related events. 
• Collision: A coverage that pays for vehicle damages resulting from a collision with another vehicle or a stationary object. 
• Loan/lease payoff: A coverage that helps pay the difference between what’s owed on a loan and the car’s actual cash value. This is commonly known as gap coverage.
• Medical payments: A coverage that goes towards paying the medical expenses for both you and those in your vehicle after an accident. This coverage is available regardless of fault.
• Rental car reimbursement: A coverage that helps pay for a rental car while yours is unable to be driven.
• Roadside assistance: A coverage that helps if you need a tow, have a flat tire, dead batteries, or in a scenario in which your vehicle has broken down.
• Uninsured/underinsured motorist coverage: A coverage that helps pay for injuries sustained by an insured — or underinsured — driver.

Colorado is a diminished value state

Colorado is a diminished value state, meaning drivers are allowed to recover diminished value from the at-fault party’s insurance company. When your vehicle experiences an accident, even if it is fully repaired to its pre-loss condition, the resale value decreases. The involvement in a collision makes your car’s value lesser than similar vehicles that have not experienced an accident. A diminished value claim allows you to recoup the losses you might experience when selling your car.  

Since Colorado is one of the 15 states that offer compensation for diminution in value, you may file by contacting the at-fault party’s insurer. In order to file a diminished value claim in Colorado, certain requirements must be met:

• You are not entitled to compensation if you were the party at fault in the accident
• Documentation will be required to process your claim. Make sure you can provide photos, records of repairs made, and proof of the value of your vehicle by a trusted source. 
• In Colorado, the statute of limitations for filing a diminished value claim is 3 years.
• Colorado does have uninsured motorist coverage for diminished value claims.

Why following Colorado’s car insurance requirements is important

Having car insurance in Colorado is not only a legal requirement, but it’s also a great way of protecting yourself and your assets. Most drivers could benefit from adding coverage or at least increasing the current limits imposed by the state. However, some may be worried about a rise in your premiums after adding such coverage. If you are concerned about added costs, it may be time to start shopping for a cheaper auto policy. With The Zebra, you can see insurance quotes from the nation’s top carriers side-by-side. Just enter your ZIP below to get started.