No-Fault Insurance Dies - Tort Lives
May 8, 2003

As we reported to you during this legislative session, several auto insurance reform bills have been considered, beginning with House Bill 1225. When that bill died, another improved form of the bill was inserted into Senate Bill 78, which died yesterday during the last day of the legislative session. Both bills revised the no-fault system in an attempt to lower insurance rates.

In the mean time, another bill, House Bill 1188 passed which re-established the tort system of auto insurance in Colorado.

What does this mean to you?
Our recent newsletter explains the differences between no-fault and tort and outlines what the minimum requirements were for no-fault under the law. The changes that affect you are:

• When an accident occurs under the tort system, the at-fault driver is responsible for the damages.
• The minimum requirement under the new tort law will be bodily injury liability coverage in the amount of $25,000 per person or $50,000 per accident and $15,000 in property damage liability coverage.
• The law takes effect on July 1, 2003 and applies to automobile insurance policies written on or after that date. Contact your insurance agent for more information.
• Auto insurance rate reductions are speculated at $150-300 per automobile per year.
• In other states that have tort, the decision of who is at fault is handled by the police officer at the scene of the accident. Disputes about who is at fault in an accident are handled through the court system. Most of the publicity about how this is handled has been centered on people having to go to court to prove who is at fault, but we don't believe that is the case in accidents where the police have ticketed someone. (For example, in a rear-end collision a ticket is issued to the second driver for failure to control the vehicle.)
• As a consumer, you will need to evaluate various policies offered by insurance companies to ensure that you have adequate coverage that serves you well. The new requirements are only minimums but you need to be aware of these minimums when selecting a policy.

What does CUA think of this?
Throughout this process, CUA has focused on several key items:

• Helping to ensure that consumers retained their rights and protections.
• Providing options that consumers could control.
• Reducing fraud and abuse because good drivers who abide by the law should not have to pay higher insurance rates because of those who abuse the system.
• Addressing other issues that affect rates such as uninsured motorists and theft.
• Reducing rates.

States with no-fault insurance have the highest rates in the country. Colorado was the 11th most expensive. However, we felt that if no-fault were to be retained, we needed to make sure that it was not retained by severely reducing consumer rights, protections and options. We wanted to see lower minimums and choices. Both systems have pitfalls but Colorado's no-fault system was very generous and very expensive. We do have concerns that the return to tort will now defer costs to medical insurance, which will increase medical insurance rates and that people who do not have medical insurance will be impacted. However, we are certain that auto insurance companies will offer other policy options that you will be able to choose.

Renée Beauregard, Executive Director
Consumers United Association
4905 W. 60th Ave.
Arvada, CO 80003
renee@cuacolorado.org

CUA is a nonprofit association with a mission to improve the financial lives of consumers through education and advocacy. For more information visit www.cuacolorado.org.