Colorado No Fault Act Sunsets

The Colorado Auto Accident Reparations Act, commonly known as the “No Fault Act,” sunset on July 1, 2003, reverting the State of Colorado back to a pure tort system. However, personal injury protection (“PIP”) provisions in individual automobile insurance policies are valid until each individual policy renews subsequent to July 1, 2003. When policies renew or are issued after July 1, 2003, they are governed by the pure tort system. Policies containing a PIP provision are still governed by the No Fault Act, which will remain on the books because PIP benefits can extend for up to ten years. See part 6 of article 4 of title 10 of the Colorado Revised Statutes for statutes governing the pure tort system. Also see Emergency Regulation 03-E-5 for regulations governing the transition to a tort system.

A complying PIP policy must provide the following benefits, set forth in the chart below:

Liability Coverage for bodily injury or death	$25,000/$50,000
Liability for property damage	$15,000
PIP Medical	$50,000 per person per accident	Within 5 years
PIP Rehabilitation	$50,000 per person per accident	Within 10 years
Wage Loss	100% of first $125 of gross income lost per week 70% of next $125 of gross income lost per week 60% of gross income lost over $250 per week Total benefits capped at $400 per week	Payable for first 52 weeks
Essential Services	Up to $25 per day	Payable for first 52 weeks
Death Benefit	$1,000 to estate of deceased

Rehabilitation benefits may be used by the injured person to pay medical expenses once medical benefits have been exhausted. This is generally referred to as “stacking” coverage. While it is permissible under these circumstances, stacking coverage from multiple PIP policies is prohibited.

Injured Persons Under 13 Years of Age

As noted above, PIP policies must provide medical benefits for up to five years of the accident. However, the statute makes an exception for injured persons under thirteen years of age on the date of the accident. Under this exception, a physician or dentist may, within five years of the accident, recommend that the necessary medical procedure be delayed until a time beyond the five-year limit. If he or she so recommends, the insurer must retain the injured minor’s file until the procedure is performed or the injured reaches the age of eighteen. Injured minors must notify insurers no later than ninety days prior to the procedure date. The notice must contain the following information:

• Accident date
• Claim number
• Description of the proposed procedure
• Diagnosis or prognosis
• Procedure date
• Name, address, phone number, and specialty of the provider.

The insurers may request a PIP examination after receiving such a notice.

Primacy of Auto Policies

Where two or more policies are available to cover a loss, statutory primacy rules determine which insurer must pay. Workers’ compensation benefits are always primary to the extent that workers’ compensation benefits are actually available, and a workers’ compensation carrier cannot claim a subrogation right for amounts that would have been paid by PIP.

The general primacy rule is as follows:

1. Workers’ compensation
2. Driver’s coverage
3. Owner’s coverage
4. Injured passenger’s coverage
5. Adverse vehicle owner’s coverage

PIP CLAIMANT PRIMARY POLICY IF NO PRIMARY POLICY IS AVAILABLE

PIP Claimant	Who's Policy is Primary	If No Primary Policy is Available
Owner Operator	Owner's	None
Owner Passenger	Owner's	Operator’s
Non-Owner Operator	Operator’s	Owner’s
Non-Owner Passenger (With permission)	Owner's	Passenger’s
Non-Owner passenger (Without permission)	Passenger’s	None
Non-profit Bus Passenger (12 passenger bus)	Passenger’s	Owner’s
"Ride Share" Passenger	Passenger’s	Owner’s
Pedestrian	Involved Vehicle(s) Owner’s	Pedestrian’s
Employee of Owner on Job	Worker’s Comp.	Owner’s

Claims Settlement Practices

Recovery of Paid PIP Benefits: Subrogation

An insurer that pays PIP benefits that should have been paid by another carrier is entitled to subrogation. It generally does not have rights against the tortfeasor. However, an insurer who pays PIP benefits does have rights against the tortfeasor in the following two situations:

• The vehicle at fault is a “non-private passenger” vehicle and the other vehicle is a “private passenger motor vehicle.”
  
• The insurance company insuring the vehicle at fault is not licensed in Colorado.

Threshold
An injured party can recover non-PIP damages in a third-party action against an owner, user, or operator of a motor vehicle if the following occurs:

• Death
• Dismemberment
• Permanent disability
• Permanent disfigurement
• Reasonable need for medical or rehabilitation benefits having value in excess of $2,500; or
• Lost wages extending beyond 52 weeks that are not covered by an applicable complying policy.
  

Binding Arbitration

The information you obtain at this site is not, nor is it intended to be, legal advice.
You should consult an attorney for individual advice regarding your own situation.
Copyright © 2004 by Wood, Ris & Hames, P.C. All rights reserved.
You may reproduce materials available at this site for your own personal use and for non-commercial distribution.
All copies must include this copyright statement.