Offsets and Stacking: How Colorado’s Uninsured and Underinsured Insurance Laws Work

Accidents happen all the time, often resulting in serious, traumatic injuries. In the best case scenario, any and all drivers involved are carrying auto insurance that will cover damages to all who are involved. Unfortunately, some people drive without insurance— in Colorado 16% of all drivers.

Still other drivers are insured, but their policy limits aren’t enough to cover the extent of victims’ injuries—which, in industry, parlance is called an “underinsured” motorist. Then there’s the case of the hit-and-run, where Colorado ranks 10th in the nation, which leaves victims with no one to pursue for injury-related costs.

Enter uninsured/underinsured motorist coverage (UM/UIM). This coverage steps in to cover damages you would have received if the at-fault driver had been fully insured. Colorado has specific laws regarding how insurance companies may calculate payments owed, which involve the concepts of “offsets” and “stacking,” discussed more fully below.

UM/UIM Coverage

In Colorado, all auto insurance companies are required to offer UM/UIM coverage as part of every policy. Policyholders may refuse such coverage in writing when they buy their coverage.

Your UM/UIM coverage kicks in if you are involved in an accident—as a driver, pedestrian or cyclist—with a motorist who is uninsured, underinsured or cannot be identified. That latter category is important— 60 percent of hit-and-run cases involving serious bodily injury in Colorado are dismissed by the courts because the fleeing driver cannot be found.

Can your coverage be “offset” by the at-fault driver’s policy?

No. Your Colorado insurance companies cannot offset (i.e., reduce) the amount a company pays to its insured, by the amount paid by the at-fault driver’s insurance company. Instead, the insurance company is obligated to pay up to the insured’s UM/UIM policy limits.

Is “stacking” permitted in Colorado?

Yes. Combing policies—known as “stacking” multiple policies onto multiple vehicles—is allowed. As of January 1, 2008, Colorado insurance companies cannot include “anti-stacking” language in policies to prevent individuals from stacking, thereby reducing the total amount available. In other words, if you are paying premiums on three separate $100,000 UM/UIM policies for three vehicles, you may “stack” them for $300,000 in coverage total.

If you’ve been injured by an uninsured, underinsured or unknown driver, send us a message or give us a call at (303) 575-9390 today to make sure your rights are protected.