Colorado Automobile Insurance Laws

Automobile insurance law is one of the most heavily tested topics on the Colorado Casualty Insurance Exam. Colorado statutes regulate how policies are issued, canceled, rated, and administered, and they include specific consumer protections.

In this module, we will break down:

• Cancellation and nonrenewal rules
• Excluded driver provisions
• UM/UIM requirements
• Financial responsibility laws
• Required and optional auto coverages
• Medical Payments (MedPay) rules
• Transportation Network Company (TNC) insurance
• Claims handling standards
• The Colorado Auto Insurance Plan

Pay special attention to notice requirements, minimum limits, written rejection rules, and prohibited practices — these are frequent exam questions.

Cancellation & Nonrenewal Rules

References: C.R.S. §§ 10-4-602–604; 10-4-626–630; Reg. 5-2-12

Colorado strictly regulates when an auto insurer may cancel or refuse to renew a policy.

Allowed Reasons for Cancellation

An insurer may cancel a policy for:

• Nonpayment of premium
• Fraud or material misrepresentation
• Loss or suspension of driving privileges
• Significant increase in hazard (e.g., reckless driving, DUI)

These reasons must be legitimate and documented.

Notice Requirements & Restrictions

• At least 30 days’ notice is required for nonrenewal.
• An accident or ticket that was not the insured’s fault cannot be the sole reason for nonrenewal.
• Claims involving towing or glass-only losses may not be used excessively for rating or nonrenewal decisions.

Sidenote

Know this...

If a question involves cancellation, always look for:

• Proper notice
• Valid reason
• Consumer protection limitations

Excluded Drivers

References: C.R.S. §§ 10-4-628–630; Reg. 5-2-2

Colorado allows policyholders to exclude specific drivers from coverage.

Key Rules:

• The exclusion must be requested by the policyholder
• It must be in writing and signed
• The excluded driver cannot operate the covered vehicle under any circumstances
• Any accident caused by the excluded driver is not covered

If the excluded driver causes an accident, there is no coverage, even if the driver had permission to use the vehicle.

Uninsured / Underinsured Motorist Coverage (UM/UIM)

References: C.R.S. §§ 10-4-609; 10-4-610

Colorado requires insurers to offer UM/UIM coverage in at least the same limits as liability coverage.

Key Requirements:

Protects:

• The named insured
• Family members
• Permissive users
• May only be rejected in writing
• Stacking is permitted, but recovery cannot exceed actual damages ** If UM/UIM is not rejected in writing, it is presumed to be included.

Financial Responsibility Requirements

References: C.R.S. §§ 10-4-619; 10-4-620; 42-7-103; 42-7-301

Colorado requires proof of financial responsibility.

Minimum Liability Limits (25/50/15)

• $25,000 bodily injury per person
• $50,000 bodily injury per accident
• $15,000 property damage per accident

Drivers must provide proof of insurance:

• After an accident
• After certain traffic violations

Drivers with DUI or high-risk driving behavior may be required to file future proof of financial responsibility (FR coverage).

Memorize: 25 / 50 / 15

Required & Optional Auto Coverages

References: C.R.S. §§ 10-4-619–621

Mandatory Coverage:

• Bodily Injury Liability
• Property Damage Liability

Optional (Commonly Purchased):

• Collision
• Comprehensive
• UM/UIM
• Medical Payments (MedPay)

The exam often tests whether coverage is mandatory or optional.

Medical Payments Coverage (MedPay)

References: C.R.S. §§ 10-4-635–641; Reg. 5-2-16

MedPay provides medical expense coverage regardless of fault.

Colorado MedPay Rules

• Must be offered at at least $5,000
• May only be rejected through a one-time written opt-out
• Cannot be coordinated with workers’ compensation
• Pays medical expenses regardless of fault

MedPay is optional — but it must be offered and properly rejected in writing.

Transportation Network Companies (TNCs)

Reference: C.R.S. § 40-10.1-604

This applies to ride-share companies like Uber and Lyft.

Coverage depends on the “period” of use:

Period 1 – App On, No Passenger

• Contingent liability coverage applies

Period 2/3 – Passenger in Vehicle

• Primary liability coverage required
• Must meet heightened statutory limits

Insurers may issue TNC-specific policies to address these exposures.

Know the difference between:

• App on (no passenger)
• Passenger in vehicle

Coverage requirements increase once a passenger enters the vehicle.

Claims Handling Rules

Reference: C.R.S. § 10-3-1117

Colorado prohibits unfair claims settlement practices.

Examples include:

• Delaying payment without reasonable cause
• Failing to acknowledge claims promptly
• Misrepresenting policy provisions
• Failing to adopt reasonable investigation standards

Violations may result in:

• Double damages
• Attorney fees
• Regulatory penalties

If an insurer acts unreasonably in handling a claim, assume it violates claims practices regulations.

Colorado Auto Insurance Plan

Reference: C.R.S. § 10-4-412

Colorado maintains a system to ensure high-risk drivers can obtain coverage.

Key Features:

• Provides insurance to drivers unable to obtain coverage in the voluntary market
• All insurers must participate in assignments
• Rates are typically higher due to increased risk
• Coverage is similar to standard policies, though limitations may apply