There are thousands of miles of roads in Minnesota. Over three million drivers use these roads, each putting in an average of 10,000 miles per year. This leads to thousands of accidents every year, some of which involve serious injuries or death. Having car insurance is both a legal obligation and common sense.
If you have the right policy, car insurance will protect you from the financial implications of an accident. However, many people don’t have a clear understanding of what their car insurance policy covers. They also don’t know how to navigate the system and have trouble choosing between coverage options, as well as filing or settling claims.
Insurance is based on a system that allows distributing risk among a group of people. When you and others buy insurance policies from insurance companies, you enter a contract in which you pay a premium, and in exchange, the insurance companies commit to paying the cost of damages set out in the contract.
The policy you buy in your name covers you, relatives in your home, and anyone that drives your car with your permission. If they don’t have their own insurance policies, they’ll be covered by yours.
In the state of Minnesota, any licensed vehicle is legally required to carry personal injury protection, uninsured motorist, and underinsured motorist coverage. The rest of this article will explain what these types of coverages mean and the minimum policy requirements.
Minimum Car Insurance Coverage Requirements in Minnesota
Minnesota requires vehicle owners to carry certain types and minimum amounts of auto insurance. Not adhering to these legal requirements can result in monetary fines and, in some cases, even jail time.
The minimum car insurance coverage requirements in Minnesota are:
Personal Injury Protection (PIP)
- $40,000 per person per accident
- $20,000 for medical expenses
- $20,000 for non-medical expenses (lost wages, replacement services, etc.)
Liability
- $30,000 for injuries to one person
- $60,000 for injuries to two or more people
- $10,000 for property damage
Uninsured Motorist Coverage
- $25,000 for injuries to one person
- $50,000 for injuries to two or more people
Underinsured Motorist Coverage
- $25,000 for injuries to one person
- $50,000 for injuries to two or more people
According to Insuranks.com , the average minimum car insurance cost in Minnesota is $472 per year. Most people purchase insurance above these minimum requirements because if you cause an accident that results in losses that surpass your coverage limits, you’ll have to pay the difference out of your own assets. Additional coverage like collision or comprehensive is not mandatory in Minnesota but can be useful.
By law, you must carry proof of car insurance in your car and show it to law enforcement officers if they ask to see it. Failure to comply leads to fines, and if you can’t afford to pay the fines, the court may order you to do community service. You can also be put in jail for up to 90 days.
What Are the Different Types of Coverage and What Do They Mean?
If you get injured in an accident, PIP or Personal Injury Protection will cover medical expenses, lost income, and replacement services for you and members of your household within the policy limit. PIP is also referred to as “no-fault insurance” because it covers these costs regardless of who caused the accident.
Liability is the part of your insurance policy that pays for injuries and property damage to other people if you are the one that caused the accident.
Underinsured coverage works as a supplement to PIP. If you or other people covered by your insurance policy get injured as a result of an accident caused by another driver, this coverage will pay for your medical bills if they exceed the liability coverage of the other driver.
Uninsured coverage pays for the damages of hit-and-run accidents and accidents caused by uninsured drivers.
Collision insurance covers damage caused by a collision with another vehicle or object, such as a tree or a fence.
Comprehensive insurance covers damages not included in collision insurance like fire and theft.
What Affects Policy Cost
According to Insuranks Car Insurance Comparison Guide, there are a number of factors that affects the cost of your car insurance, such as:
- Age and gender. Insurance companies calculate risk based on statistics, and these statistics show that accident rates vary according to age and gender. Women have lower accident rates and therefore pay lower premiums. Similarly, teenagers have higher accident rates than older drivers, so they pay higher premiums.
- Where you live. Living in a larger city as opposed to a quiet rural area means that there’s a higher chance of having an accident, so car insurance will cost more.
- Type of vehicle. If your car costs more to repair or replace, insurance providers will charge you more in premiums.
- Mileage. The more you drive, the more likely it is that you get into an accident, and the higher your insurance rate.
- Driving record. If you have too many accidents, some insurance companies might even turn down your application, but as a rule of thumb, the more accidents or traffic tickets you have, the more you’ll be charged in premiums.
- Coverage. If you opt for higher coverage amounts or get additional coverage like collision and comprehensive, you will pay more in premiums.
- Deductibles. Some types of coverage come with a deductible which is the amount of money you pay out of pocket before your insurance kicks in. The higher the deductible, the lower the premiums.
- Discounts. You can also lower your premiums through various discounts. For instance, some discounts are legally mandated. Drivers that complete a defensive driving course get a discount of 10%. You can also equip your car with an authorized anti-theft protection device and get a 5% discount on comprehensive auto insurance.
No-Fault Car Insurance in Minnesota
Minnesota follows a no-fault insurance system which was established to make it easier for accident victims to get prompt medical treatment and to relieve the burden on the courts. Many people mistakenly believe that a no-fault system implies that their insurance provider will cover all the losses resulting from an accident regardless of who caused it.
In reality, under a no-fault system, your insurance provider will only cover the costs associated with injuries resulting from a car accident. This includes medical bills, loss of income due to injuries and replacement services (for example, housekeeping and other chores if you can no longer do them because of your accident), and $2,000 in funeral expenses.
The claims will be made on your personal injury protection. If they exceed the limits of your PIP coverage or you meet certain requirements, you can file a claim to get compensated from the other driver’s liability insurance, provided they are legally found at-fault.
The requirements are:
- Permanent injury or disfigurement
- 60 or more days of disability
- At least $4,000 of reasonable medical expenses.
If you meet these requirements, the amounts not covered by your PIP insurance can be recovered from the at-fault driver’s liability insurance.
Note that Minnesota’s no-fault laws only apply to injuries and not to property damage. You can make claims for property damage against the at-fault driver with no limitations.