COLORADO PUBLIC LEGAL LIBRARY · CITIZEN GUIDE

Citizen’s Guide to Colorado Uninsured / Underinsured Motorist Coverage

How Colorado UM/UIM works, who is protected, what must be proved, how liability-side settlement affects the claim, and why current Colorado law must be read together with the declarations page, complete policy, endorsements, damages evidence, and liability-policy disclosures.

Colorado auto-insurance focus · Current-law framework: 2026 · Public legal education

Start here — six records to obtain

1. Declarations page. Confirm UM/UIM limits, named insureds, covered vehicles, policy period, and other listed coverage information.
2. Complete policy and endorsements. Read the insuring agreement, definitions, exclusions, notice/consent language, limits, other-insurance provisions, and every endorsement.
3. Liability-policy disclosure. Obtain the at-fault driver’s liability limits, tender, disclosure response, denial or reservation letter, and any known umbrella/excess or other relevant policy information.
4. Hit-and-run / unknown-driver proof, if relevant. Preserve law-enforcement reports, witness information, photographs, notice timing, and proof of efforts to identify the other driver.
5. Damages file. Preserve medical records and bills, wage-loss evidence, impairment, future-care proof, treatment chronology, and non-economic-damages evidence.
6. Settlement and consent record. Before releasing the tortfeasor, give the UM/UIM carrier written notice and address any policy consent-to-settle requirement. Preserve the tender, proposed release, notice, consent request, response, and proof of delivery.

Who is an insured person?

Insured status is policy-specific. Depending on the form, protected persons may include the named insured, resident relatives or rated residents, certain occupants, permissive users, or persons asserting derivative damages because of injury to a covered insured. Do not assume that coverage belongs only to the person who purchased the policy.

Read the actual definition in the issued policy and every endorsement. Household status, vehicle occupancy, permission, residency, and policy-specific wording can change the result.

Exhaustion under current Colorado law

Older policy forms sometimes say that UIM benefits are payable only after the tortfeasor’s liability limits have been “exhausted by payment” of settlements or judgments. That wording should not be treated as a complete statement of current Colorado law.

Tubbs — actual payment of the full liability limit is not required

Tubbs v. Farmers Insurance Exchange, 2015 COA 70, held that an “actual exhaustion” requirement conditioning UIM coverage on the insured’s actual collection of the tortfeasor’s maximum liability limit is void and unenforceable under C.R.S. § 10-4-609(1)(c). The UIM carrier’s obligation is measured against damages in excess of the tortfeasor’s legal-liability limit, not against whether the insured actually collected that entire limit.

Wenzell — 2026 excess-UIM clarification

In USAA v. Wenzell, 2026 CO 25, the Colorado Supreme Court addressed an exhaustion clause in the excess-UIM context. The Court held that an excess carrier may use an exhaustion clause to define when its layer is reached, but exhaustion must turn on the policyholder’s undisputed damages reaching beyond the underlying limits—not on actual payment of those underlying limits.

Current-law takeaway: distinguish the amount of the underlying legal-liability limits, the amount actually paid in settlement, the claimant’s provable damages, and the attachment point of any primary or excess UM/UIM layer.

Sample policy subjects — educational only

The source page used ten policy-language blocks. They are preserved below as issue-spotting subjects, not as current-form quotations. The actual declarations, policy, endorsements, and Colorado law control any live claim.

Liability settlement & consent-to-settle workflow

The safest practice is to coordinate any liability settlement with the UM/UIM claim before executing a release.

1. Obtain the liability disclosure and investigate additional liability, umbrella, employer, owner, commercial, or excess coverage.
2. Obtain the tender letter and the complete proposed release.
3. Give the UM/UIM carrier written notice of the proposed settlement.
4. If the policy requires consent, request written consent before signing the release.
5. Preserve proof of delivery and the carrier’s response.
6. Identify non-settling parties and whether the release language would affect them.
7. Identify any subrogation or reimbursement concern asserted by the UM/UIM carrier.
8. Do not execute the release until the UM/UIM consequences have been evaluated.

Lauric qualification: failure to comply with notice and consent-to-settle provisions can seriously jeopardize a UIM claim, but Colorado applies a notice-prejudice framework. Under Lauric v. USAA Casualty Insurance Co., 209 P.3d 190 (Colo. App. 2009), a settlement made in breach of such provisions is presumptively prejudicial, but the insured has an opportunity to rebut that presumption; if rebutted, the insurer must establish actual prejudice.

Treat every liability release as a coverage event, not merely a settlement document. See also The Global Release Problem and When the Release Is Signed, Truth May Arrive Too Late.

Common questions

Is UM/UIM the same as liability coverage?

No. Liability coverage protects an insured against claims by others. UM/UIM is first-party coverage claimed under the injured person’s own policy or another policy that protects that injured person.

Does UM/UIM automatically pay when the other driver has low limits?

No. The claimant still must establish insured status, legal liability, bodily injury, damages, the relevant liability limits, policy compliance, and the amount owed under the governing policy and Colorado law.

Must I actually collect the full liability limit before UIM applies?

Not merely because a policy says so. Tubbs holds that an actual-payment exhaustion requirement is void under § 10-4-609(1)(c). Excess-UIM layers can raise additional attachment questions; Wenzell, 2026 CO 25, ties excess exhaustion to undisputed damages reaching the underlying limits rather than actual underlying payment.

Can the UM/UIM carrier reduce available coverage by the liability payment or MedPay?

Section 10-4-609(1)(c) prohibits reducing the amount of available UM/UIM coverage by setoff from other coverage. The ultimate benefit calculation still depends on damages, limits, duplication, priority, and current case law, so require a written calculation and legal basis.

Should I ask for consent before settling with the at-fault driver?

Yes when the policy requires it. Written notice and advance consent are the safest course. Failure to comply can create a presumption of prejudice under Lauric, but coverage forfeiture is not automatic in every case.

Why does policy disclosure matter?

UIM analysis depends on identifying the full liability-coverage picture, including known umbrella, excess, commercial, owner, employer, and other relevant policies. A single limits letter may not establish the complete legal-liability limits.

Is arbitration automatic?

No. Arbitration depends on the actual policy, any agreement between the parties, and governing law. Check the policy and applicable deadlines rather than assuming arbitration is mandatory or available.

Related VictimsGuide resources

• Coverage Disputes — read grants, definitions, exclusions, conditions, and endorsements systematically.
• Policy Disclosures — obtain the liability-side policy information needed for UIM analysis.
• Third-Party Liability — identify the tortfeasor, owner, employer, business, and other liability layers.
• Sample Colorado PPA Policy — historical sample policy structure and UM/UIM wording, clearly separated from current law.
• Claims Handling & Delay — preserve the first-party insurer-conduct chronology.
• Colorado MedPay — coordinate first-party medical-payments issues without collapsing MedPay into UM/UIM.
• Clean Claim System — organize liability coverage, damages, UM/UIM policy documents, consent correspondence, and calculations.
• Glossary of Auto Insurance — definitions for UM, UIM, insured person, limits, offsets, exhaustion, and releases.
• There May Be More Than One Policy and Hidden Insurance Is a Power Problem — why UIM analysis begins with the complete liability picture.