Roughly one in eight Colorado drivers operate without insurance. When an uninsured or underinsured motorist causes a crash, your uninsured and underinsured motorist (UM/UIM) coverage provides a critical safety net—but only if you understand how it functions under Colorado law.
What Is Uninsured and Underinsured Motorist Coverage?
Uninsured motorist (UM) coverage compensates you when the at-fault driver has no insurance. Underinsured motorist (UIM) coverage fills the gap when their insurance is insufficient to cover your damages. Colorado distinguishes between two types:
- Uninsured Motorist Bodily Injury (UMBI) covers medical expenses, lost wages, pain and suffering, and other injury-related damages when an uninsured or underinsured driver injures you.
- Uninsured Motorist Property Damage (UMPD) covers vehicle repairs when an uninsured driver damages your car. Colorado requires this coverage; the state minimum is $25,000.
UMBI is technically optional in Colorado, but your insurer must offer it. You must affirmatively reject it in writing if you decline coverage.
Colorado's Unique UM/UIM Rules
Stacking. Colorado allows UM/UIM stacking under many policies. If you insure multiple vehicles and each carries separate UM/UIM limits, you may combine those limits for a single claim. For example, two vehicles with $100,000 UMBI each could yield up to $200,000 in coverage for one accident. Verify whether your policy permits stacking—not all do.
Set-Off Reduction. Colorado applies a set-off rule that reduces UM/UIM payments by amounts you recover from the at-fault driver's liability coverage. If you receive $50,000 from their insurer but your total damages are $150,000, your UM/UIM coverage applies to the remaining $100,000, minus any applicable deductible. This rule can significantly limit your net recovery.
Affirmative Offer Requirement. Insurers must affirmatively offer UMBI; silence or failure to offer constitutes bad faith. If your insurer never clearly presented UMBI as an option, you may retain rights to it despite policy language suggesting rejection.
When You Can File a UM/UIM Claim
UM/UIM claims extend beyond scenarios involving completely uninsured drivers. Colorado law covers:
- Fully Uninsured Drivers. The at-fault party carries no auto insurance whatsoever.
- Underinsured Drivers. The at-fault driver's liability limits fall short of your damages. If their policy maxes at $50,000 but your medical bills total $150,000, UIM bridges the gap.
- Hit-and-Run Accidents. If a driver flees the scene and remains unidentified, your UM coverage may apply. You typically must have filed a police report and cooperated with your insurer's investigation.
- Uninsured Motorist Property Damage Claims. The at-fault driver caused property damage and has no insurance or insufficient UMPD limits.
Filing a UM/UIM Claim: Key Steps
Report the Accident. Document the scene, collect witness information, and file a police report. This record strengthens your claim, particularly in hit-and-run cases.
Notify Your Insurer Promptly. Colorado insurers often impose strict notice deadlines. Delay can jeopardize your claim. Provide a detailed accident account, medical records, repair estimates, and any documentation of damages.
Gather Evidence. Compile medical records, invoices, receipts, pay stubs showing lost wages, and photographs of vehicle damage. UIM claims require proof that the at-fault driver's coverage is truly insufficient.
Obtain the At-Fault Driver's Insurance Information. Confirm their policy limits. If those limits are less than your provable damages, UIM coverage applies. If the driver genuinely lacks insurance, your UM coverage activates immediately.
Request a Demand Package Review. Before filing suit, consider sending a detailed demand letter outlining your damages, supporting documentation, and legal basis for the claim. Some cases settle without litigation; others require court intervention.
Common Challenges in UM/UIM Claims
Causation and Liability Disputes. Your insurer may argue the accident was not the uninsured/underinsured driver's fault or that you bore partial responsibility. Colorado applies comparative negligence; if you are more than 50% at fault, you cannot recover.
Damages Valuation. Insurers frequently undervalue pain and suffering, lost earning capacity, and medical necessity. Medical evidence, expert testimony, and detailed documentation are critical to overcoming lowball offers.
Policy Limits and Deductibles. Your UM/UIM deductible (often $500–$1,000) reduces any payment. Additionally, your total recovery cannot exceed your policy limits minus any amounts already paid by the at-fault driver's insurer.
Duty to Settle. Colorado law imposes a duty of good faith and fair dealing on insurers. If your insurer refuses a reasonable settlement and you obtain a judgment exceeding your UM/UIM limit, you may have a bad-faith claim against your own insurer.
Underinsured Motorist Coverage and Hit-and-Run Accidents
UIM claims require proof that the at-fault driver's coverage is insufficient. In hit-and-run cases, UM (not UIM) typically applies if you cannot identify the other vehicle and its driver. Colorado requires that you report the hit-and-run to police and cooperate fully with your insurer's investigation. Your own policy may impose conditions—such as a police report filed within 24 hours—that affect eligibility.
Negotiation and Litigation
Many UM/UIM claims resolve through negotiation and mediation. However, if your insurer's offer is unreasonably low, you may file a lawsuit. In Colorado, UM/UIM disputes often involve arbitration clauses; your policy may require binding arbitration rather than court proceedings. Review your policy language to understand your dispute-resolution options.
When litigation proceeds, discovery can uncover evidence of the at-fault driver's financial inability to pay, strengthening your UM claim. If you prevail at trial, you recover your judgment amount up to your policy limit.
Why Professional Representation Matters
Insurance companies are sophisticated negotiators with financial incentives to minimize payouts. An attorney experienced in Colorado UM/UIM law can evaluate your claim, identify policy stacking opportunities, challenge unfavorable set-off calculations, and advocate for full compensation. Many disputes hinge on technical policy interpretation or insurer bad faith—areas where legal counsel proves invaluable.
If you have been injured or your vehicle damaged by an uninsured or underinsured motorist, McCormick & Murphy can evaluate your claim and explain your options at no cost. We work on contingency, meaning you pay no attorney fee unless we recover compensation for you.