If you've been unable to find auto insurance through a company online, it's likely that your driving record included traffic accidents, motor vehicle violations, or just a lack of driving experience. These are all factors that can cause you to be considered a high risk driver, and make auto insurers in Colorado’s voluntary market decline to write you a policy. If that’s the case, one alternative you have is to find coverage through Colorado’s Motor Vehicle Insurance Plan (CO AIP). This entity will help you find auto insurance to meet Colorado's minimum requirements. Once you are covered, you’ll want to practice safer driving in order to be eligible for the voluntary market and better Colorado insurance rates.
What is the Colorado Motor Vehicle Insurance Plan (CO AIP)?
The CO AIP is often called a “market of last resort,” and was created to provide automobile insurance to eligible drivers who could not get coverage otherwise. It is not an insurance company, but rather an entity that assigns drivers to existing auto insurers that are licensed to do business in the state of Colorado. It’s a voluntary agreement among the companies (and the state’s Insurance Commissioner) to equitably share any losses that may come from covering high risk drivers. Every company that wants to write auto insurance in the state of Colorado must participate in the plan. Each company accepts a share of high risk drivers that matches its share of the overall auto insurance market. So for example, if State Farm covers 18% of Colorado drivers, then it must cover 18% of the high risk drivers too.
Your insurance agent is authorized to submit applications to the CO AIP, so if the agent can't find you a willing insurer, he/she will try the CO AIP and let you know if you are eligible.
Colorado AIP Eligibility
In order to be eligible to apply for insurance through the CO AIP, you must be a licensed driver with a car registered in Colorado. In addition, you must certify on your application for insurance through CO AIP that you have tried to find insurance in the voluntary market within the previous 60 days – and you’ve been unable to find it.
You may NOT be eligible to apply through the CO AIP if you have had an outstanding auto insurance premium payment within the last 12 months. Similarly, if your auto insurance policy has been cancelled in the last 12 months because you did not present your car for inspection by an authorized insurance representative, you cannot apply through the CO AIP. The good news is, once you pay the outstanding bill and/or present your car for inspection, you can apply through the CO AIP immediately.
FIlling out your application fully and accurately is important. If the insurer discovers that you have submitted false important information on your application, your will be barred from re-applying for 12 months. The penalties for driving without insurance may be high in Colorado.
Colorado AIP Coverage
Colorado AIP offers drivers the same types of insurance coverage that any other CO insurers would. It just may cost more, and with some exclusions. For example, your insurance company through the CO AIP does NOT have to offer physical damage coverage if your car is older than 25 years, or if its actual cash value is greater than $25,000.
Once you find coverage through the CO AIP, you are guaranteed coverage for 3 years, as long as you remain eligible. That is, you maintain a valid driver’s license and a valid Colorado registration. As mentioned previously, you’d be wise to improve your driving record during this period in order to be evaluated as a “safe driver” who can return to the voluntary insurance market. If you do find coverage in the voluntary market, you can switch without penalty to another insurer. If you are still a high risk driver after 3 years, you can reapply to the CO AIP and be considered a new applicant. Note that means you may be assigned to a different insurer, but you will get coverage.
The following table shows the insurance coverages available. In case of an accident, you will be in a better position to recover, both financially and physically. Be aware that you can buy more than the mandatory minimums for Bodily Injury and Property Damage, and that may be the right way to go to properly protect your assets.
|Mandatory Coverage||Colorado Min. Required Limits||CO AIP Max. Limits|
|Bodily Injury (BI)||$25,000 per person / $50,000 per accident||$100,000 per person / $300,000 per accident|
|Property Damage (PD)||$15,000 per accident||$50,000 per accident|
Your insurance agent will also offer you the additional coverages shown below. Colorado insurers are obligated to include Medical Payments and Uninsured/Underinsured Motorists coverage on your policy, but you can reject this in writing if you wish. Comprehensive and Collision coverage may or may not be offered, depending on your car.
|Optional Coverage||CO AIP Min. Limits||CO AIP Max. Limits|
|Medical Payments (MedPay)||$1,000 per person per accident||$5,000 per person per accident|
|Uninsured/Underinsured Motorists BI (UM/UIMBI)||$25,000 per person / $50,000 per accident||As high as your BI limits|
|Physical Damage (collision and comprehensive)||Actual cash value||Actual cash value up to a max of $25,000|
Colorado AIP Premiums and Payments
As a general rule, safe drivers pay lower insurance premiums than high risk drivers. But there is no simple formula for knowing how much more high risk drivers will pay. Because premiums can vary enormously by insurer, it’s wise to shop around.
There are dozens of insurance companies in Colorado, and each has their own preference when it comes to insuring drivers. But there are key factors that are common among most insurers to rate you. By knowing what these are, you can take actions over time to reduce your auto insurance premiums.
Colorado insurers offer basically 2 ways to pay your premium. The first is to pay 40% of the annual premium up front with your application and the rest of it within 30 days of policy effective date. The second way is to pay 40% of the annual premium with your application, and the balance in a series of 5 monthly installments. There is a $4 service charge added to the installment payments. Talk with your insurance agent about which option you prefer.
Be sure to make your auto insurance premium payments on time. If you miss more than two installment payments, even your CO AIP policy could be canceled. Avoid the hassle of getting your insurance reinstated (and being marked as a “late payer”) and keep current with this!
How to Apply to the Colorado Motor Vehicle Insurance Plan
Every licensed Colorado auto insurance agent can help you apply to the CO AIP.
If you’d like more information about the CO AIP, call the Colorado Division of Insurance at 1-800-930-3745.