Anyone in who drives a car in Colorado must have car insurance as per state laws. If you reside in Colorado, you must know a few basic facts about car insurance before you take your car out for a spin.

Colorado used to be a �No Fault� state until 2003. Now, the state follows a tort system. Under this system, it is believed that the accident is the fault of one of the parties involved in it. The liable driver and his insurance company are required to pay for all the damages sustained by other parties.

All drivers, regardless of age, must have minimum liability insurance in the state of Colorado. The minimum liability in Colorado is 25/50/15. This means, $25,000 is the liability amount for bodily damages per person per accident. $50,000 pays for the bodily injuries of everyone involved in the accident. Property damage liability is $15,000 and this pays for damages to property such as walls and fences.

You have the option of purchasing this as a combined single limit by paying a minimum amount of $60,000, which basically serves as proof of financial responsibility.

Purchasing uninsured/underinsured motorist bodily injury coverage is not mandatory in Colorado, but it is suggested you get this valuable coverage. It pays for bodily injuries and other damages when you are involved in an accident with a driver who is either uninsured or underinsured.

Though it is not compulsory under Colorado state law for drivers to purchase comprehensive and collision coverage, it is mandatory for the insurance companies to offer them to customers. However, if you have bought your car on loan, your lender may require you to buy collision coverage until your loan is paid off.

Colorado state law requires insurers to offer you Medical Payments coverage for a minimum amount of $5,000. If you don't want this coverage, you must opt out as its likely bundled by default in the policy. If you don�t as your auto insurance provider to remove it, this optional coverage will be automatically added to your premium.

It is important for you to check the lease agreement when leasing a car. Normally, these agreements require you to have liability coverage of $100,000 per person and $300,000 per accident and property damage coverage in excess of Colorado Insurance Law.

Failure to comply with the insurance laws can land you in trouble. You may face either a fine or a suspension. In some cases, you may even face imprisonment.

For more information on all aspects of Colorado�s auto insurance requirements, residents can visit the Colorado Division of Insurance located in Denver website available athttp://www.dora.state.co.us/insurance/ or by call their office at 1-800-930-3745.

The current average car insurance premium rate for residents of Colorado is $1,687. This rate is 30% higher than what it was in 2008.