According to Colorado law, every owner who registers a vehicle in the state is required to maintain continuous financial responsibility.

Ways to Establish Financial Responsibility

Unlike some other states, Colorado only offers two financial responsibility options:

• Self-service insurance is available, but only if you have 25 or more vehicles registered in your name.

• Liability coverage, which is covered in more detail below.

Liability insurance remains the popular choice with most drivers and with good reason―it's most drivers' only choice.

Colorado Liability Insurance Requirements for Private Passenger Vehicles

Here are the state's minimum liability insurance requirements:

• $25,000―per person for bodily injury

• $50,000―per accident for bodily injury

• $15,000―per accident for property damage

All licensed land vehicles require insurance. Under this criteria the following vehicles do not need coverage:

• All-terrain vehicles (ATVs)

• Go-karts

• Snowmobiles

• Boats

• Private planes

Keep in mind that you're not restricted to these minimums. You can also bolster your protection with additional types of coverage.

NOTE: As of January 1, 2009, the state requires med-pay coverage (pays $5,000 in medical expenses following an accident). Depending on your carrier, you may see a slight jump in your premiums. You do, however, have the option to refuse this coverage when you submit a letter to your insurance company.

Proof of Insurance and Financial Responsibility

Although law enforcement officials have access to an insurance database, you still must produce one of the following if asked:

• A certificate of self-insurance

• An insurance identification card your carrier issues you

• A letter from your insurance company, typed on company letterhead.

Penalties for Failure to Maintain Financial Responsibility

Driving with no proof of insurance is considered a misdemeanor and comes with the following penalties:

• First offense―A minimum fine of $500, four points added to your driving record, and possible suspension.

• Second offense―A minimum fine of $1,000 and a four-month suspension.

• Third offense―A minimum fine of $1,000, community service, and an eight-month suspension.