Nowadays, most of us set up our auto insurance for auto-pay, and after initially setting it up we do not reexamine it. We pay our premiums, but as life changes we forget that we may need different coverage. Here at Law One, we recommend you review your policy annually, to review your coverages and limits to be sure you have the proper coverage for your situation.

The first kind of coverage most of us have is liability coverage. Liability coverage provides protection for other drivers if you are at fault in an accident. In Colorado, you are required to have a minimum policy limit of $25,000.00 of liability coverage. What this means is that if you are at fault in an accident, your insurance provider could pay the other driver up to $25,000.00 for their damages, injuries, pain and suffering.

You can always obtain more coverage by paying a higher premium. Many drivers ask, “Why would I want to pay for more coverage just to benefit someone else?” The reason is because at-fault drivers can be personally held liable for any damages that are greater than their policy limits.

Here is a useful hypothetical: Imagine you have paid for a minimum policy limit of $25,000.00 and you are at fault in an auto accident. The other driver sustains $35,000.00 in total damages. Your insurance company will only pay $25,000.00 of those damages, meaning that you could be personally liable for the additional $10,000.00. Generally, increasing your liability coverage to $50,000.00 requires only a small increase in your premium, but provides a lot more protection in case you ever cause an accident.

We hope you are never involved an auto accident, let alone the cause of one. Having the right amount of coverage can give you peace of mind, and can also ensure that an auto accident will not have a devastating impact on your life. Be sure to understand your policy limits and confirm that they are enough to protect you and your family.

This post is the first in a series of free, educational materials on automobile insurance provided by James Anderson of Law One. In the next part, we will look at uninsured coverage and why you should always have it.