Today I’m going to talk about liability insurance, a type of coverage that many of you have heard about but might not understand what it covers, how it works, how much it pays, or how to read those crazy numbers with slashes in it. I’m also going to explain why is it often referred to as the cheapest insurance coverage and what Colorado law requires you to carry.
What is liability insurance? Liability insurance is intended to protect your assets if you are found legally responsible for a covered accident, including expenses associated with bodily harm sustained by the other party as provided by your policy and State law. This coverage will also provide for your legal defense if a suit is brought against you as a result of this accident.
I’m going to cover how you read what limits of liability you are carrying. Some of you may have what’s called a 500 CSL, or a Combined Single Limit (CSL) for liability. This means you have $500,000 for Liability. The combined single limit simply states a single dollar limit that applies to any combination of bodily injury and property damage liability claims. In comparison, split limit insurance is where three separate dollar amounts apply to each accident: per person limit, per occurrence limit for all injured persons, and per occurrence limit for all property damage resulting from the accident. Here is an example of what is called a split limit 25/50/15. These limits are in thousands, so it would read $25,000 per person, not to exceed $50,000 per accident for bodily injury and $15,000 for property damage. I have also seen split limits of liability as high as 500/500/500. This is also in thousands, so this would read $500,000 per person, not to exceed $500,000 per accident for bodily injury and $500,000 for property damage.
Liability Insurance is often referred to as the cheapest insurance and here’s why: Liability insurance is the minimum the State requires you to carry when you are operating a motor vehicle. Liability insurance only covers the person that you ran into. It does NOT cover any of YOUR bodily injury, YOUR medical bills, or YOUR property. When you carry just liability, you are 100% responsible for your damages and bodily injuries sustained in your vehicle, including the injuries to your passengers.
The State of Colorado requires you to carry liability insurance on ANY MOTORIZED vehicle you operate. This means your car, your truck, your motorcycle, your boat, your four-wheeler, your golf cart, your scooter. If it has a motor, you are required to have liability insurance on it. I have even seen signs on 4x4 trails, boat docks and BLM land that require you to carry liability insurance. It doesn’t matter if you are on a backroad in the boonies, in town or on the State highway...You are bound by the State laws, NO exceptions. The State of Colorado requires you to carry a minimum of $25,000 per person, not to exceed $50,000 per accident for bodily injury and $15,000 for property damage. Guys...this is REALLY LOW. Let’s think about this for a moment. If you were to get into a serious accident, those limits would be eaten up real quick. With the rising cost of medical help, I always mention that $25,000 wouldn’t even get you around the block in an ambulance. The $15,000 for property damage is obviously not near enough. Shoot, a new truck can cost $70,000 or more! If you were to run into a $70,000 truck, total it and you had $15,000 property damage liability limits, that would leave a balance owed of $55,000 after the insurance company paid the max of $15,000. The truck owner could then (and likely WILL) come after you for the remaining $55,000. The owner could and would exhaust all of his options to collect this money. Isn’t that terrifying?! This could cost you everything you worked so hard in life to own. We recommend that you carry at least a minimum of $100,000 per person, not to exceed $300,000 per accident for bodily injury, and $100,000 for property damage if you are a home owner. This is a higher limit form of liability coverage, so remember that this type of insurance only covers the other party. This coverage cannot be taken lightly. It is the most important coverage you can ever have on an auto policy. *There are other forms of insurance outside of liability only that would cover your property and bodily injury, but we’ll discuss that in another blog.
I hope this helps you understand how liability insurance works. If you have any questions or would like to talk about your insurance please let us know, we would be happy to help! Thanks for your time in reading our blog today. And remember, Sterling Peaks Insurance...We take the confusion out of insurance.
What in the world is an SR-22 ?!?
Most people have heard the term SR-22, but it seems that aside from being forced to have one, most people don’t know much about SR-22s. And that’s OK! I’m here today to answer your questions and address your concerns surrounding an SR-22.
What is an SR-22? An SR-22 is sometimes referred to as a certificate of financial responsibility but is most commonly known as SR-22 insurance. However, it is not a type of car insurance. An SR-22 is a state-mandated certificate, filed by your auto insurance carrier with your state’s Department of Motor Vehicles (DMV). An SR-22’s whole purpose is to verify to the state that a person is maintaining (at a minimum) liability coverage with their auto insurance as required by law.
An SR-22 is required when someone who was in an accident or convicted of a traffic offense couldn’t show financial responsibility. You would need an SR-22 if you were caught driving without auto insurance, if you have gotten a DUI or DWI, had any serious moving violations, had an at-fault accident while driving without insurance, had repeat traffic offenses, had too many tickets in a short period of time or if you were caught driving on a revoked or suspended license. There could be several other reasons the DMV would request an SR-22 or that a judge may order you to have one.
Many people wonder how much a mandated SR-22 costs. It does vary by state but the auto insurance companies will typically charge a nominal fee of $0 to $25 for actually filing an SR-22 form each time your policy terms renews. If you need an SR-22, you will first need an auto insurance policy. Your auto insurance rate will be determined based on all the factors that normally go into rating a policy. An increase in rate premium is usually reflective of the fact that many auto insurance companies find people who are mandated to carry an SR-22 riskier to insure due to the violation that caused it. You can anticipate an increase in premium, however, be wary of the least expensive SR-22 insurance quotes. They may not be the best. You should always consider the company’s service, financial responsibility, and reliability when making an insurance purchase of any kind.
You’ll need to go through your auto insurance provider to obtain an SR-22 because only an insurance company that is filed with the state can issue a SR-22. In addition, if you have an SR-22 in one state but move to another, you’ll need to fulfill the SR-22 requirements for your former state and your new liability limits in your new state will need to meet the minimums required by law in the state you formerly lived in.
The State of Colorado, as with most other states, requires drivers mandated to have an SR-22 to carry SR-22 insurance for 3 years (In some cases the minimum could be longer or shorter depending upon what is mandated). Continuous auto coverage must be maintained the whole time. If there is an auto insurance lapse or cancellation, your auto insurance company is legally obligated to notify the DMV and your license will be suspended immediately. Even if you choose not to drive for 3 years to try and escape the SR-22 mandate, you may find that you are still expected to obtain a policy with an SR-22 for another 3 years in order to reinstate your license. This also varies state by state and sometimes case by case, so be sure to confirm with your local DMV exactly what they need from you to meet the requirements in your particular case.
You can avoid the complications and expenses involved with having to have an SR-22 filing by:
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