First your sister-in-law needs to find out if the niece is covered under the car insurance policy that is on the vehicle. If the niece does not have her own insurance policy it may not matter as long as the car owner's insurance would extend and cover her when she is operating the car with permission. Since she is regularly driving the car your sister-in-law may need to add the niece to the policy for her to be properly covered, her insurance agent could tell her if this is needed or if the niece was covered as the policy current stands.

Now if the car itself is not insured than it is an issue for both the driver and the car owner since an uninsured vehicle should not be on the roadway in Colorado.

The Colorado Division of Insurance (DOI) states that if you own an automobile in Colorado you are required to purchase auto insurance. By law, you are required to carry liability insurance to provide financial protection in the event you injure someone else or damage someone else’s property while operating your automobile.

The Colorado Revised Statute 42-4-1409 discusses the state financial responsibility / compulsory insurance law. This states that no owner of a motor vehicle required to be registered in this state shall operate the vehicle or permit it to be operated on the public highways of this state when the owner has failed to have a complying policy or certificate of self-insurance in full force and effect as required by law.

It is against the law in Colorado to drive your vehicle without insurance. If you are caught driving without insurance there are severe penalties.

A first offense for driving without insurance comes with a $500 minimum fine and 4 points being placed onto your CO motor vehicle record (MVR). A second is a minimum $1000 fine and a license suspension of 4 months. A third violation comes with penalties which can include a minimum fine of $1000, community service, and an 8 month license suspension.

If the niece was in an accident and either there was not insurance on the car or she was not covered by the car's insurance policy than both her, the driver, and your sister-in-law, the car owner, could be held liable and have to pay personally for the damages caused to others. Also the niece could face the penalties listed above for driving without insurance.

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