1986 Colorado No-fault Insurance Update: New Coverage and Threshold Provisions
| Publication year | 1986 |
| Pages | 619 |
| Citation | Vol. 15 No. 4 Pg. 619 |
1986, April, Pg. 619. 1986 Colorado No-Fault Insurance Update: New Coverage and Threshold Provisions
Up until last year, there has been little concern over Colorado's no-fault statute. Because of the small $500 medical expense threshold requirement, the ability to bring suit on behalf of a client against a negligent party presented few obstacles. With the passage of new legislation, however, this course may not be so smooth. Many practitioners may turn away potentially viable cases simply because they do not meet the increased $2,500 threshold.
This article examines the background of the no-fault concept in order to help understand the current no-fault provisions. Other factors it examines include the constitutionality of the new threshold requirement, as well as the statutory alternatives that may allow a client who does not meet the medical expense threshold to have a cause of action.
Under the traditional tort system, automobile accident victims were compensated for their damages by assessing liability on those who failed to exercise reasonable care, proximately causing injuries by their acts of negligence. In contrast, no-fault automobile insurance plans are characterized by the payment of benefits to an accident victim, whether or not the victim is at fault.(fn1)
There are three types of no-fault plans: pure, modified and extended first party.(fn2) A pure no-fault plan completely abolishes tort actions for bodily injuries and provides unlimited benefits for lost wages and medical expenses to accident victims. However, it appears that no states follow this statutory scheme.(fn3)
Modified plans provide benefits for lost wages and medical expenses but, unlike pure plans, the amount of first-party benefits payable is generally limited. Additionally, tort actions against negligent parties are not abolished; instead, they are restricted and can be maintained only in specifically enumerated instances.(fn4) Colorado has enacted a modified plan, as have several other jurisdictions.(fn5) Every state's threshold limitations, the provided benefits, and the instances where tort actions can be brought are different.
The third type of no-fault proposal is the expanded first-party benefit plan. Sometimes referred to as "add-on" plans, they provide for the payment of first-party benefits regardless of fault, but do not provide an exemption from tort liability.(fn6) Expanded first-party benefit plans are not actually no-fault plans since the necessary element of limiting tort actions is not present; nevertheless, such plans have been enacted in several states.(fn7)
Normally, under a modified plan, the restriction on tort recovery applies only to the operator, owner, or user of the motor vehicle and to parties vicariously liable for the acts or omissions of those persons. Under Colorado's modified plan, there is no limitation on the right of recovery against: a non-complying tortfeaser (uninsured); a person who deliberately or intentionally commits a tort; or a manufacturer, distributor, supplier or repairman liable as a result of product liability or product defect. There is no limitation on tort actions if the injured party is ineligible for no-fault insurance coverage and is not responsible for noncompliance with the statute.
In considering no-fault exemptions for the person injured by an uninsured motorist, by a motorist committing an intentional tort or by a person operating a defective vehicle, two reasons are often given for permitting full tort recovery.(fn8) First, the state has a legitimate objective in requiring all motorists to obtain adequate insurance, and the possibility of tort liability acts as a
It has been over a year since the passage of two important motor vehicle insurance bills. The Colorado Auto Accident Reparations Act (hereafter, "the Colorado no-fault act"),(fn10) codified at CRS § 10-4-705, was amended to include "motorcycle" and "motorscooter" in the definition of "motor vehicles," requiring compulsory legal liability coverage. CRS § 10-4-706(1) now requires compulsory legal liability coverage of $25,000 for bodily injury or death of any one person in any one motor-vehicle accident, and $50,000 for all persons in any one accident. The property damage insurance requirement is now $15,000 in an individual accident. The same limits are now also required for uninsured motorist coverage, discussed below.
Further revamping of no-fault insurance personal injury protection ("PIP") benefits took place with the passage of House Bill 1108, effective January 1, 1985.(fn11) The most notable changes concern required coverage and the limitation on tort actions.(fn13)
Specific changes in required coverage include the following: (1) an increase in no-fault medical benefits from $25,000 to $50,000; (2) an extension on the time limitation for covered medical treatment from three to five years from the date of the accident; (3) an increase in weekly compensation from a maximum of $125 per week to 100 percent of the first $125 of lost gross income per week, 70 percent of the next $125 of lost gross income per week and 60 percent of the lost gross income per week in excess, but not to exceed $400 per week; and (4) an increase in the daily amount of essential services from $15 per day to $25 per day (for an extra premium, most insurance companies will extend medical benefits and lost wage benefits to $100,000). Finally, the amount of medical bills which now must be incurred before a civil action can be filed against a negligent driver was increased from $500 to $2,500.
Vehicles are generally placed into four categories when considered for inclusion or exclusion from the operation of the Colorado no-fault act: (1) private passenger, (2) commercial, (3) governmental and (4) vehicles with less than four wheels. Private passenger vehicles are always included in the operation of no-fault, based on the theory that since there are a greater number of private passenger vehicles than either governmental or commercial vehicles, there is a greater probability of accidents and lawsuits.(fn13) Also, it is assumed that private individuals are more likely to be economically forced into small claim settlements than commercial concerns.
In Colorado, there is also a distinction between commercial (included) and noncommercial (excluded) vehicles. Vehicles that operate out of the normal traffic flow on highways, roads or other nonpublic places are considered noncommercial. Therefore, farm equipment and recreational equipment (e.g., golf carts and snowmobiles) fall into this category and are exempt.
The Colorado no-fault act also excludes governmental vehicles such as state, federal, police and fire vehicles from mandatory coverage. Bushnell v. Sapp(fn14) held the exclusion of governmental vehicles to be nonarbitrary and reasonable, as well as being nonviolative of equal protection. Finally, as noted above, CRS § 10-4-705 has been amended to include "motorcycle and motorscooter" in the definition of "motor vehicle," but Colorado has not extended its no-fault laws to include motorcyclists.
The basic scheme of uninsured motorist coverage within the no-fault legislation is to provide for the protection of persons insured under no-fault insurance laws who are legally entitled to recover damages because of bodily injury or death from owners or operators of uninsured motor vehicles. CRS § 10-4-609 requires that such uninsured motorist coverage be provided unless specifically rejected in writing. Even though this insurance is compulsory, the minimum amount of coverage required is small. CRS § 42-7-103(2) of the Motor Vehicle Financial Responsibility Law provides for an uninsured motorist liability policy of not less than $25,000 due to bodily injury or death to any one person in any one accident and, subject to said limit for one person, to a limit of not less than $50,000 due to bodily injury or death of two or more persons in any one accident. A property damage limit in the amount of $15,000 is also provided.
CRS § 10-4-609(4), amended in 1983, provides that uninsured motorist coverage shall also include coverage for damage for bodily injury or death which an insured is legally entitled to collect from the owner or driver of an "underinsured" motor vehicle. An "underinsured" motor vehicle is further defined as an insured motor vehicle at the time of the accident and injury which has limits for bodily injury or death that are less than the uninsured motorist coverage provided by the insured's policy.
The maximum liability in such a situation is defined in CRS § 10-4-609(5) as being the difference between the limit of uninsured motorist coverage and the amount paid to the insured by the negligent driver, or the amount of damages sustained but not recovered. Thus, if a driver who has uninsured motorist coverage in the amount of $50,000 is in an accident with another driver who has liability coverage only in the amount of $25,000, depending upon the severity of the injuries, this driver may be able to recover not only $25,000 from the negligent driver's liability policy, but also an additional $25,000 from his or her own uninsured motorist coverage.(fn15)
One of the important legislative intentions of the...
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