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FAQ:

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Auto Insurance:

How much auto insurance coverage is required in my state?

The minimum amount of liability insurance required by Colorado law is as follows:

$25,000 per person for bodily injury;

$50,000 per accident for bodily injury; and

$15,000 per accident for property damage

Additional coverage, such as medical payment coverage, uninsured motorist coverage, comprehensive and collision are available, but not required. As of Jan. 1, 2009, Colorado requires mandatory "med-pay" coverage with all insurance policies. You may refuse this coverage in writing.

If you’re involved in a serious accident, your lower limits may not cover the accident’s costs! Generally, higher limits don’t cost much more than lower limits. If you’re involved in an accident you’ll be glad you have the increased protection!

How much auto insurance coverage do I need?

A growing number of people are dropping their auto insurance to try to save money, according to a recent study by the Insurance Research Council (IRC). If the current rate of unemployment continues, the IRC estimates that the national uninsured rate will climb from 13.8 percent in 2007 to 16.3 percent in 2010. With that many people driving without coverage, it's dangerous to be uninsured. But how much car insurance do you really need?

State law tells us we have to have minimum amounts of auto insurance. You can reduce your auto insurance premiums like most people by getting bare bones liability only coverage. But is it worth the extra risk? In an accident, your insurance company will pay the damages up to your chosen limits. By not purchasing enough insurance, you may save a little money, but you will also have to face legal problems, lawsuits, and huge out-of-pocket expenses for what your insurance doesn’t cover.

The greater your assets, the more you stand to lose. If you have substantial financial resources, you may need liability coverage that exceeds the coverage that you'll get from an auto insurance policy. In that case, a Personal Umbrella can provide the extra liability protection you need.

Collision covers damage to your car from an accident. We can help you decide whether or not to carry collision coverage by balancing the cost of collision insurance with the value of your car. It might not be worth paying $200 a year for collision insurance on a car that's worth only $1,000. But if the car is worth $10,000, you probably want this coverage.

Comprehensive coverage pays for your car if it is stolen, vandalized or damaged in some way other than in a collision.

Medical coverage provides for medical expenses to you and your passengers that are the result of an accident. The way you use your car may make a difference in the amount of medical coverage you need. For example, we might suggest more coverage for a parent who regularly takes a carload of kids to soccer practice than for a driver who expects to drive mostly alone. As of Jan. 1, 2009, Colorado requires mandatory "med-pay" coverage with all insurance policies. You may refuse this coverage in writing.

What does full coverage mean?

The term full coverage generally means that the insurance policy has both liability coverage and comprehensive and collision coverage for your vehicle. Full coverage does not mean that all damages to the other party are covered no matter what. For example, if you only have $15,000 in property damage liability and you are responsible $25,000 in damage you can be held responsible for the difference.

I plan to buy a new car. Do I need coverage for this car before I drive it off the lot?

Your new car must be insured before you drive it off the lot. If you have a policy in force, the new car will be automatically covered for 30 days. However, if you cover a new car under an existing policy without notifying your insurance company, some companies may change some of your coverage limits until they have received notice from you about the new car, and decided they want to insure it. When you buy a car, new or used, is a good time to review your coverage and check prices among competing companies. Start by getting quotes for the year, make and model of the car you plan to buy.

If you´re considering more than one make and model, checking the price of insurance may help you decide. Although two cars may seem the same, the repair costs may be dramatically different, and that will have a significant impact on your insurance costs.

Do I need special auto insurance coverage if my auto's leased or financed?

When you lease or financed, your vehicle belongs to the financial institution. They want to make sure that their investment is covered should you have an accident that damages or destroys the vehicle, or if the vehicle is stolen. They may also want you to have sufficient liability coverage in case you are at fault in causing an accident. This not only protects you from financial disaster, but it also protects the lease company if they should be held partly responsible.

The first thing to do is check your loan or leasing agreement because it should provide details on the kinds of auto insurance coverage your financial institution requires. Most auto lease companies require you to maintain insurance coverage as follows:

Liability coverage: $100,000 per person / $300,000 per occurrence

Property liability coverage: $50,000

Comprehensive and collision for actual value with no more than $500 deductible.

What Is Uninsured Motorist Coverage?

There are two types of Uninsured Motorist Coverage:
Uninsured Motorist Bodily Injury Coverage protects you and the occupants of your vehicle for bodily injury up to your auto insurance policy limits as a result of an accident with a legally liable uninsured motorist or "hit and run" driver.
Uninsured Motorist Property Damage protects your property up to your car insurance policy limit for property damage that results from an accident with a legally liable uninsured motorist or "hit and run" driver.

What factors affect my auto insurance rates?

Your auto insurance premium is based on several factors. The most significant factors are: your driving record, the number of miles you drive annually and number of years of driving experience you have. Other factors which can also affect your rates are: the type of car you drive, how the vehicle is used, where you live and marital status. Statistics show that married people tend to have fewer accidents than single people.

Who's watching the insurance companies?

With few exceptions, your insurance company does not set its own rates. It requests the right to charge appropriate rates from your state's insurance department, which responds with legal approval and authorization, provided the requested rates are fair.

Every state has some sort of department, administration or agency that regulates and monitors every insurer operating within the state's borders. In addition to approving rates, your state's insurance department is involved in all insurance matters on behalf of private citizens and businesses. It also issues operating licenses to insurance companies and agents, based on their ability to meet the state's requirements for conduct and knowledge about insurance issues.

Your insurance company works closely with your state's insurance department to make sure you are getting the best and fairest possible service within the state's guidelines. Contact your state's insurance department if you wish to know more about how it serves your interests.

Why does the premium for my auto insurance go up if I have an accident or get a ticket?

Actuaries and statisticians who have studied the behavior of people involved in accidents have shown that people who have either had an accident or received a ticket recently are more likely to have another accident in the next couple of years than people whose recent driving record has been incident-free.

Insurance companies use this information not to punish people, but to charge them a premium that reflects their likelihood of having an accident. People who are more likely to have accidents should expect to pay higher premiums.

What should I do if I get into a car accident?

Your obligations after you have an accident are proscribed both by state law and your insurance contract. Clearly, the first thing you should do is be sure everyone is all right and call an ambulance immediately if needed.

Second, for most accidents in most states, the police should be alerted.

Third, give the other driver(s) involved your name, address, telephone number, and the name of your insurance provider and/or your insurance agent. Get this same information from the other party.

Fourth, as soon as possible, contact either your insurance agent or your insurance company to notify them that you have been involved in an auto accident.

Lastly, there are requirements in the insurance contract that you must satisfy to receive compensation from your insurer. For example, you must cooperate with your insurer during any investigation during the claims settlement process.

Not fulfilling any of these obligations can result in nonpayment by your insurance provider for losses that otherwise would have been compensated for.

What happens if I have an accident with an uninsured driver?

First, call the police to the scene to be sure all pertinent information is properly recorded. Your nerves will be shaken right after an accident, and it helps to have a calm and knowledgeable person walking you through the necessary details.

Then, contact your agent immediately and ask about filing a claim. If you followed all the recommended guidelines when you bought your policy, you should be covered within the limitations of that policy. Remember, your insurance policy is designed to protect you.

If the cost of your damages or injuries exceed the amount your policy will pay out, it may be time to take legal action against the other party.

I plan on driving through several states during my next vacation. I carry the minimum coverage allowed by my state, but will my insurance cover me if I have an accident in another state while I am away?

Clearly, the laws concerning insurance coverage can vary greatly from state to state. It might be comforting to know that if you have the minimum auto liability coverage for your home state, but are involved in an accident in another state, your policy will generally adjust to meet that state's minimum legal requirements.

I have towing and labor coverage on my auto policy. Does it only come into effect after an accident?

Towing and labor coverage provides emergency road service and pays for towing charges. This coverage is not limited just to accidents, but can be used any time your car breaks down. Labor such as a tire change or battery jump-start performed at the site of a disabled vehicle will be covered, but not the later repair work performed in a service station.

Do I need special insurance for a classic car?

You should always talk to your agent about coverage of rare and valuable property. Since a classic car usually cannot be replaced, you'll probably want ample compensation if it is lost. A classic car, because it is rare or unique, may indeed require a special insurance policy.

Helpful Links

Carfax
Providing complete title histories since 1984
http://www.carfax.com

Edmund's
Consumer information experts, relied upon since 1966
http://www.edmunds.com

Kelly Blue Book
Find out your used car values
http://www.kbb.com

Registry of Motor Vehicles
The Official Colorado Registry of Motor Vehicle Website
http://www.colorado.gov/revenue/dmv

Glossary:

A | B | C | D | E | F | G | H | I | L | M | N | O | P | R | S | U | V | W

ACCIDENT

An event that happens by chance and is not foreseen and intended, usually causing damage or injury. In case of automobiles, this is usually referred to as a 'collision'.

ACTUAL CASH VALUE (ACV)

"Actual Cash Value" is the replacement cost of property damaged or destroyed at the time of loss, with deduction for depreciation. Actual cash value cannot exceed the applicable limit of liability shown in the declarations of the policy, nor the amount it would cost to repair or replace such property with material of like kind and quality within a reasonable amount of time after a loss.

ADDITIONAL INSURED

A person or party, other than the policyholder, who is added to a policy so that they will also be covered by that policy

ADJUSTER

A person who investigates and settles losses for an insurance carrier.

APPRASAL

An estimate of the property value or of the extent of damage by an authorized person. Appraisals are performed to determine the value of the property at the time of the loss.

AUTO LOSS HISTORY

A third party consumer report that provides a history of a person's automobile losses.

BINDER

Immediate insurance coverage that can be in oral or written form. Usually provides temporary coverage for a specified time until a formal policy is accepted or denied.

BODILY INJURY (BI)

Coverage that may pay medical costs of others and your legal defense costs due to an accident involving your insured vehicle.

BODILY INJURY LIABILITY INSURANCE

This coverage protects an insured against legal liability for injury to another person arising from an accident.

BUSINESS INTERRUPTION INSURANCE

Coverage for the loss of earnings in the case the policyholder's business is shut down by fire, windstorm, explosion or other insured peril. It's often added as a rider to a standard business policy and pays for such expenses as the rebuilding of an accounts receivable database, cleaning computers, leasing temporary office space, and similar losses associated with a disaster.

BUSINESS OR GENERAL LIABILITY

Coverage that protects you and your business from financial loss resulting from claims of injury or damage caused to others by you or your employees, resulting from your business operations including your premises, your products, and your operations or services. The injury or damage may be unintentional or through negligence. Liability consists of three parts: Bodily Injury and Property Damage, Personal and Advertising Injury,and Medical Payments or Expenses. It may be a standalone coverage product or part of a policy package that includes Business Property coverages.

CANCELLATION

Termination of an insurance policy by the insured or insurer prior to the end of the policy period.

CERTIFICATE OF INSURANCE

This certifies to the certificate holder that the policy indicated is in force as of the dates shown on the certificate.

CLAIM

A request to an insurance company to pay for a loss. After a claim is requested or filed an evaluation process will begin to determine if the loss is the responsibility of the requested company.

CLAIMANT

One who makes a claim under an insurance policy.

CLAIM ADJUSTER

Someone who performs the field work involved in settling a claim, including investigating, appraising and negotiating a claim.

COLLISION COVERAGE

Pays for physical damage to a covered motor vehicle caused by collision of that vehicle with another object or by upset of the vehicle. The amount paid is subject to the deductible you choose.

COMPREHENSIVE COVERAGE

Pays for loss of or damage to a covered motor vehicle by theft, fire, vandalism glass breakage or collision with a bird or animal. The amount paid is subject to the deductible you choose. In some states, you may choose no deductible for glass losses. This is known as "full coverage glass"

COVERAGE

The protection provided under a contract of insurance.

DECLARATION

That part of that policy describing the named insured, address, effective date, term of the policy, line of business, the amount of insurance and the premium.

DEDUCTIBLE

The amount the insured is required and obligated to pay by the insurance policy. The deductible is chosen by the insured and is usually applied to coverage's such as comprehensive and collision. Generally the lower the deductible, the higher the insurance premium.

DEPRECIATION

A decrease in the value of an item or property due to wear, age, or other cause.

EFFECTIVE DATE

The date the policy starts and insurance protection begins. May also be called the "inception date." This date can be found on your Declaration (DEC) Page or Insurance Identification Card.

ELECTRONIC FUNDS TRANSFER (EFT)

This method of payment withdraws a preset amount from a bank account or credit card each month (with the policyholder's permission).

ENDORSEMENT

Amendment to the policy used to add or delete coverage.

EXPIRATION DATE

Date when insurance coverage ends.

EXTENDED REPLACEMENT COST

Pays full replacement costs without depreciation for covered personal property losses.

FLOOD INSURANCE

A regular homeowner's policy will not pay for damages caused by flooding. Companies that write for the National Flood Insurance Program (NFIP) provide coverage. Outside of fire, flooding is the most widespread natural disaster. If your community participates in NFIP's floodplain management program, you should be eligible to buy the coverage. Residents of "coastal barrier resource system" areas and communities that do not participate in NFIP's programs may have trouble finding flood coverage. Flood insurance is also available to renters, condominium owners, and co-op owners.

FLAT CANCELLATION

Cancellation of a policy at or before it becomes effective with the entire premium refunded to the policyholder.

GENERAL LIABILITY INSURANCE

Coverage for an insured when negligent acts and/or omissions result in bodily injury and/or property damage on the premises of a business, when someone is injured as the result of using the product manufactured or distributed by a business or when someone is injured in the general operation of a business.

GRACE PERIOD

The period of time following an insurance premium’s due date during which you can still make a payment without your policy lapsing.

HAZARD

A condition that creates or increases the chance that a loss will occur. For example, a wood-burning stove may increase the chance of fire losses.

INSURABLE INTEREST

Interest in property such that loss or destruction of the property could cause a financial loss.

INSURED

All who are covered and listed by the insurance policy. Most insurance companies require every licensed driver living with you must be listed on your insurance policy unless they have a completely separate policy of their own.

INSURER

The insurance company.

LAPSE

A lapse in coverage is considered to be any period of time during which you did not maintain the minimum insurance limits required by your state.

LIABILITY

Auto insurance that pays for bodily injury (BI) or property damage (PD) you cause another person.

LOSS

Direct and accidental damage to the insured automobile or property used as the basis for filing a claim.

LOSS OF USE

For automobile policies, loss of use provides for other means of transportation when the covered motor vehicle is damaged or stolen. For property policies, loss of use provides coverage for the additional living expenses incurred by the insured who is forced to vacate the premises as the result of a covered loss.

MEDICAL PAYMENTS COVERAGE

This type of coverage provides payments for medical treatments for bodily injury due to a covered accident and up to the coverage limit. It is generally for the people in your vehicle and has no deductible.

MOTOR VEHICLE REPORT (MVR)

This report contains a record of a driver's driving history and will include details of any accidents or violations.

NAMED INSURED

The person specifically designated by name as the insured in an insurance policy. This person is also referred to as the policyholder.

NAMED PERILS

Insurance contract under which covered perils are listed. If a loss results from an unlisted peril or event, no benefits are paid.

NOTICE OF LOSS

Notification to an insurance company by an insured or claimant that a loss has occurred. Written notice may be required, although many companies accept notice by telephone.

OCCURRENCE

An accident, including exposure to conditions, which results, during the policy period, in bodily injury or property damage.

ORDINANCE OR LOW

As building codes change over the years, your home may eventually be out of compliance with the latest standards. In the event that your home needs repairs following an insured loss, those repairs would need to meet the current building standards. The difference in value of your home currently, and what it would cost to rebuild adhering to current standards, is not covered by your policy without this endorsement.

PACKAGE POLICY

A combination of two or more classes or kinds of insurance in a single policy. A homeowner's policy, for example, is a package combining property, liability and theft coverages for the homeowner.

PERIL

The cause of a possible loss. For example, fire, theft, or hail.

POLICY

A written contract or certificate of insurance.

PREMIUM

The amount charged by an insurance company, usually either annually or semiannually, in exchange for insuring the policyholder.

PRIMARY INSURED

A person named in the base policy who is covered by the insurance.

PRINCIPAL DRIVER

The person who drives the vehicle most often. Also referred to as the Primary Driver.

RATE

A charge per unit in determining insurance premiums.

RENEWAL

Keeping an active insurance policy in place by meeting the terms of your insurance contract and continuing it automatically through renewal at the end of the policy period.

REPLACEMENT COST

The cost to repair or replace an insured item. Some insurance only pays the actual cash or market value of the item at the time of the loss, not what it would cost to fix or replace it. If you have personal property replacement cost coverage, your insurance will pay the full cost to repair an item or buy a new one once the repairs or purchases have been made.

SALVAGE

The remaining value of property damaged to the extent that it is not economical to perform repairs.

SALVAGE TITLE

When a certificate of title is surrendered and evidence that a vehicle was declared a total loss by an owner or an insurance company, the Secretary of State may issue a certificate of salvage.

SR-22

An SR-22 is an official document showing proof of financial responsibility and filed with the state motor vehicle department. You may be required to file an SR-22 if convicted of certain traffic violations.

SUBROGATION

An insurer’s contractual right to take legal action against a third party responsible for a loss to an insured for which a claim has been paid. For example, an insurance company pays a claim for $40,000 in damages to an insured storekeeper for losses cause by a negligent contractor working next door. The policy's subrogation clause gives the insurer the right to be subrogated to, or take on as its own, the storekeeper's claim and to sue the contractor for damages.

UMBRELLA POLICY

An extra layer of coverage purchased as additional protection above the limits of another insurance policy. Whereas most auto and home insurance policies provide less than $1 million in coverage, an umbrella policy can add millions of dollars worth of protection over and above those set policy limits.

UNDERWRITING

Process of examining, accepting, or rejecting insurance risks, and classifying those selected, in order to charge the proper premium for each. The purpose of underwriting is to spread the risk among a pool of insureds in a manner that is equitable for the insureds and profitable for the insurer.

UNINSURED/UNDERINSURED MOTORIST COVERAGE

Covers you when you're involved in an accident with another driver who has no insurance or lacks sufficient coverage to pay for the damage he or she causes.

VANDALISM

The willful or malicious destruction of public or private property.

VEHICLE IDENTIFICATION NUMBER (VIN)

Your vehicle's unique 17-character VIN can be found on the dashboard and driver's side door jamb. It is also included on your vehicle's registration form and insurance card.

WORKERS’ COMPENSATION

Liability insurance requiring certain employers to pay benefits and furnish medical care to employees for on-the-job injuries, and to pay benefits to dependents of employees killed by occupational accidents.

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