Expect auto insurance changes | SummitDaily.com
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Expect auto insurance changes

SUMMIT COUNTY – Insurance policies, rates and requirements are about to change for Colorado drivers – but nobody’s exactly sure how yet.

The Legislature declined to pass a bill this session that would have renewed the current insurance system, essentially reverting Colorado’s insurance law to a tort-based system. The state has been operating under a “no-fault” insurance system in which a driver’s insurance company is responsible for all of his or her claims, regardless of who caused the accident that necessitated the claims. Under the tort-based system, fault is assigned in accidents.

The reform was prompted by the insurance industry and consumers. In 2000, Colorado had the 11th highest auto insurance premiums in the country. Rates climbed between 20 to 30 percent in 2002.



Legislators are hoping the change in law will make insurance more affordable for motorists. One of the changes that is certain is that drivers will no longer be required to pay for personal injury protection (PIP) riders on their policies.

“For a lot of people, that’s a third of their insurance bill,” said Carole Walker, executive director of the Rocky Mountain Insurance Information Association.



“Last year, people paid $130,000 in PIP coverage. First, they’re told they have to buy insurance, and then many are told they have to buy more than they can afford. The best thing about this is it’s going to give people choices to save money,” Walker said.

The change doesn’t take effect until July 1. Insurance companies still aren’t certain how the changes will affect customers in Summit County. Local insurance agents contacted Thursday said their parent underwriters are sending letters to clients explaining that the change is coming and that customers should contact agents after July 1 or when their policy comes up for renewal.

Arrow Insurance owner Maggie Lifland said she suspects the tort system will merely mean a shift in costs, as opposed to a savings. For example, Lifland said, PIP coverage includes rehabilitation from injuries and loss of income. Motorists who go without the formerly required rider will need to consider disability insurance, she said. In addition, the threshold for lawsuits under the no-fault system was $2,500. Now, victims of accidents can sue for any amount, possibly leading to an increase in insurance company legal costs.

“All these claims are going to get paid somehow, somewhere,” Lifland said. “None of us really knows exactly what’s going to happen.”

The change is welcome for Frisco resident Virgil Scott. When informed the insurance reform bill had passed, Scott, renewing his registration at the Department of Motor Vehicles in Frisco, said it’s about time. Scott said his insurance rates are reasonable, but the no-fault system has caused him extra headaches since an accident earlier this year.

Scott said he was the passenger in a car and suffered injuries that caused him to miss work and need physical therapy.

“Even with the personal injury settlement from the driver’s insurance, it doesn’t cover everything,” Scott said. “And accidental coverage is so expensive. It’s all pretty complicated. I think this will improve things.”

The improvement won’t come overnight, however. Walker said it took a long time for the state to get into the insurance mess, and it will take a while to get out. For example, she said, insurance companies will be paying out PIP claims for the next 10 years.

“The long-term changes will take a while,” Walker said. “The important thing is that we were heading in the wrong direction, and this has turned us around.”

Reid Williams can be reached at (970) 668-3998, ext. 237, or rwilliams@summitdaily.com.


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