Insurance Fact and Fiction: What Type of Coverage Do You Need?

By: Eric Erickson Tuesday December 24, 2013 comments

Insurance exists so that we don’t have to think about it. We don’t have to worry about risk. We don’t have to fear the loss of our home or business in the event of a natural disaster. This type of fearlessness comes with a cost, and part of that cost is finding the right policies for your life. Many types of liability coverage are required by law, such as auto liability insurance and commercial insurance. Other types of coverage are optional, but required as a condition of your loan agreement. But how do you know which types of insurance you need, and which types of insurance is advisable to protect your own finances? 

The state of Colorado regulates insurers in the state and enforces regulations regarding mandatory insurance. There are many types of insurance, and many of them are offered to Front Range customers through the convenience of one phone call. At Insurance By Phone, your Fort Collins insurance agent can help you determine which types of coverage you need, and other types of coverage that you may wish to obtain.

The Truth about Auto Insurance

The truth is, there are several types of auto insurance policies that you can choose from, and premiums can range from very inexpensive to very costly. The first thing to know is that as a driver in the state of Colorado, you are required to possess liability coverage. Your coverage limit requirement is as follows:

  • $25,000 per person for bodily injury – This means that your insurer pays other drivers (or the passengers of other drivers) up to this amount in the event of an accident where you are at fault.
  • $50,000 per accident for bodily injury – This means that your insurer will pay only twice the per-person maximum for every accident in which you are at fault.
  • $15,000 per accident for property damage – This means that your insurer will pay up to this amount for other driver’s automobiles or other property damage stemming from an accident in which you are at fault.

Although many drivers want to find the cheapest coverage around, you have the option of extending these coverage limits by paying a slightly higher premium. If medical costs exceed these limits on your basic liability coverage, you will be responsible for all additional costs.

Collision and Comprehensive Auto Coverage

If you finance your vehicle, your lender will require you to have collision insurance, and they will normally allow you to choose your own policy. When you are selecting collision coverage in this instance, you are protecting the life of the car while it is still owned by the lending institution. You may decide to select the cheapest coverage available, but remember, your premium payment will often reflect a very high deductible, meaning that you are responsible for out-of-pocket costs prior to your coverage kicking in.

If you own your vehicle, collision and comprehensive coverage is optional. There are other types of coverage as well, including uninsured/underinsured motorist insurance, which covers your vehicle when an at-fault driver lacks the coverage to repair your vehicle. This type of coverage is only offered as an addition to your regular policy.

Workers Comp and You

Homeowners policies are not required by law, but if you run a business in Colorado that employs at least one other person, you are required by the state to carry workers compensation coverage. Workers compensation insurance covers your liability against workplace accidents that lead to medical expenses and lost time at work.

If you run a sole proprietorship and don’t hire any employees, you are exempt from workers compensation requirements. However, certain types of independent contractors or repair worker paid on a contract basis might need to be covered. Businesses with volunteer workers are also not required to purchase workers compensation insurance.

Other Required Types of Coverage

When you own a home, chances are you are living in a property that is owned by a mortgage lender. Because of this, they will require you to have property coverage with limits that help pay for the house if it is destroyed by fire or other disaster. It is important to note that homeowners insurance does not cover flood damage. Separate flood insurance can be purchased through the federal government’s Flood Assistance Program. Property coverage can also protect you from vandalism, theft, or civil unrest.

Other types of liability insurance for homeowners cover injuries to others while at your home. Through this type of policy, you can choose to extend your liability coverage to include medical expenses insurance, which covers you at your home or away from your home, whether or not you are declared to be at fault.

Image courtesy of winnond

Eric Erickson

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