Thanks to an anonymous alert reader for this update on potentially higher umbrella policy premiums. Our intrepid investigator passed along this information from her agent.
“State Farm told me it’s because Colorado law has increased the cap to $1.5 million on non-economic damages for lawsuits starting January 2025 (up from the approximately $600K previous cap) for general personal injury cases. And that amount will now be adjusted for inflation every two years.”
Here are more details from Insurance Broker Extraordinaire Sandra Abeyta of Mountain Storm Insurance:
Colorado raised the cap for non-economic damages in personal injury lawsuits to $1.5 million for cases filed on or after January 1, 2025. The cap will be adjusted for inflation every two years starting January 1, 2028.
For wrongful death actions, the cap for non-economic damages increased to $2.125 million, and will also be adjusted for inflation biennially starting in 2028.
Personal injury lawsuits: The cap for non-economic damages increased from a lower amount to $1.5 million for lawsuits filed on or after January 1, 2025.
Wrongful death lawsuits: The cap for non-economic damages rose to $2.125 million for cases filed on or after January 1, 2025.
Inflation adjustment: Starting January 1, 2028, the caps for both personal injury and wrongful death cases will be adjusted for inflation every two years.
Medical malpractice: The new legislation also includes a separate, phased-in increase for medical malpractice cases, with the cap for non-economic damages increasing incrementally to $875,000 by 2029, after which it will be adjusted for inflation every two years.
Effective date: The changes to the caps became effective for any lawsuits filed on or after January 1, 2025.
Sandra is waiting for more information from the various insurance carriers about how this will affect rates. Stay tuned!
