In Minnesota, vehicle owners are mandated to carry specific amounts of auto insurance coverage. This requirement aims to protect the owner's assets from financial repercussions and assist in covering repairs, medical expenses, and other costs if the owner is deemed liable in an accident.
Purchasing auto insurance in the state can be complex, and a thorough understanding of the required coverage and procedures to follow in the event of a collision is needed. Minnesota's No-Fault Law, as will be discussed, plays a crucial role in the state's approach to auto insurance.
Under this regulation, the Minnesota Department of Public Safety (DPS) and the Minnesota Department of Commerce (DOC) work diligently to ensure residents receive appropriate service and treatment following an accident.
What are the Auto Insurance Requirements in Minnesota?
In Minnesota, vehicle owners must carry specific minimum levels of auto insurance coverage as mandated by Minnesota Statues 65B.49. This includes Personal Injury Protection (PIP), which provides basic economic loss benefits for medical or funeral expenses, lost wages, and replacement services, with a required coverage of $40,000 per person per accident.
Liability coverage is also mandatory, helping to cover injury and property damage expenses when the policyholder is deemed at fault, with required coverage of $30,000 for injuries to one person, $60,000 for injuries to two or more people, and $10,000 for physical damage to other vehicles or property.
Additionally, uninsured and underinsured motorist coverage is required, providing protection when the at-fault driver lacks sufficient insurance, with minimums of $25,000 for injuries to one person and $50,000 for injuries to two or more people. These minimum coverage levels help to safeguard the vehicle owner and others involved in an accident.
Optional Insurance Coverage
There are other optional insurance coverage choices in Minnesota and some of these are the following:
Collision Coverage
This coverage will protect the vehicle in case of an accident that involves a collision with another vehicle or object. In some cases, the cost of the damage may be covered by the insurance of the other driver.
Comprehensive Coverage
Comprehensive coverage, on the other hand, will cover damages caused by circumstances other than a collision. This may involve forces of nature like fire, storm, or even theft and deer-related accidents.
If a vehicle is financed through a loan, the lender usually requires the buyer to avail of the optional coverages, collision, and comprehensive coverage to safeguard their financial interest. If the owner doesn't maintain this coverage, the lender may purchase a more expensive policy on the owner's behalf.
Some policyholders prefer to add specialized items into their insurance coverages, like glass replacement or towing, but these items come at an additional price. Also note that insurers vet potential policyholders and consider multiple factors simultaneously, as each policyholder receives an assessment tailored to their personal needs.
Coverage for Rental Cars
In Minnesota, automobile insurance policies must provide a minimum of $35,000 in coverage, without a deductible, for damage to and loss of use of rental vehicles, including pickup trucks and vans under 26,000 pounds. State law mandates that a separate notice informing the driver of this coverage must be attached to the rental contract.
This also states that purchasing any collision damage waiver or similar insurance is unnecessary if the driver's policy was issued in Minnesota. No collision damage waiver or other insurance affecting the rented vehicle can also be sold unless the renter agrees in writing that they have understood the notice. This way, drivers are protected when renting within the state.
Motorcycles and ATVs
Minnesota's motorcycle insurance requirements differ from those of standard vehicles. Minnesota Statutes mandate that motorcyclists carry liability insurance, underinsured coverage, and uninsured coverage. Notably, PIP is not required for motorcycles in the state.
All-Terrain Vehicles (ATVs) present a unique insurance situation. Standard auto insurance policies do not typically cover them. However, homeowner's policies may offer partial liability coverage for these vehicles.
Given the specific nature of these insurance requirements and coverages, motorcycle and ATV owners are advised to consult with their insurance agents or companies for detailed information tailored to their situations.
Penalties for Driving Without Insurance
In Minnesota, driving without insurance is a serious offense with significant consequences. According to Minnesota Statute 169.791, drivers must carry proof of insurance at all times when operating a vehicle and must produce it upon demand by a peace officer.
The penalties for failing to provide proof of insurance can be severe. A first offense is typically classified as a misdemeanor. However, if a driver commits this violation within ten years of two prior convictions under this statute or related laws, it becomes a gross misdemeanor.
Fines for driving without insurance range from a minimum of $200 to the maximum allowed for misdemeanors. The court may permit community service instead of fines for indigent defendants. Additionally, convicted individuals face potential revocation of their driver's license and vehicle registration.
The law provides some flexibility for drivers to later produce proof of insurance, but this must be done by the date and time specified for their first court appearance. Vehicle owners who are not driving at the time of the citation have ten days to provide proof of insurance when notified.
Certain exemptions apply to this law, including buses operated by the Metropolitan Council, commercial vehicles with filed proof of insurance, and school buses.
Minnesota as a "No Fault" State
With the Minnesota No-Fault Automobile Insurance Act, drivers injured in car accidents seek compensation through their insurance policies, regardless of fault. This system applies exclusively to injury-related expenses, not property damage.
Initially, claims are filed against one's own PIP. However, if expenses exceed the policy's PIP limit or specific thresholds are met, the injured party may pursue a claim against the other driver's liability coverage, provided the other driver is found liable.
No-fault claims in Minnesota must be submitted within six months of the accident. This system aims to streamline the compensation process and reduce litigation. Note that while no-fault coverage addresses medical expenses and lost wages, it does not cover vehicle damage or pain and suffering, which may require separate claims or legal action.
How To Choose the Right Auto-Insurance in Minnesota?
Choosing an insurance policy is a personalized process that requires careful consideration of several key factors. To make an informed decision, potential policyholders should evaluate the following:
Licensing and Regulation
Make sure that the insurance company is licensed to operate. On the national level, the National Association of Insurance Commissioners (NAIC) has the Consumer Insurance Search feature where drivers can check whether their insurance provider or broker is duly licensed.
Individuals can also use the License Lookup Directory provided by the Minnesota DOC. This online tool allows users to search for the status of various licensees, including insurance providers.
To locate auto insurance companies specifically, select the appropriate license type from the dropdown menu on the directory's webpage. The search results will display information about licensed insurers, helping consumers verify the legitimacy of potential insurance providers.
Financial Stability
Select a financially stable company with a long history of success, as this indicates a strong foundation. Prioritize insurers that are likely to remain solvent in the long term.
Recommended insurance providers in Minnesota include Geico, State Farm, Auto-Owners, and American Family. These companies are recognized not for being the cheapest but for their longevity and stability, which reflect their deep knowledge and understanding of the Minnesota insurance market.
Competitive and Responsive Service
Check at least three quotes from different insurance companies, agents, and online sources, and study the coverage plans carefully before committing to any of them. The ideal insurance company should satisfy not just the technical needs but also relate to the customers and make them feel comfortable and understood.
Positive Reviews and Customer Feedback
Policyholders may check with other customers and consult the Minnesota Insurance Guaranty Association to gauge the company's service quality. This may include after-sales support and how reachable they are during inquiries, clarifications, or requests.
What Factors Affect Auto Insurance Rates in Minnesota?
Choosing the right car is a significant decision, and selecting the right auto insurance is equally important. As a way to protect their business, insurance companies have ways of evaluating insurance premiums based on the customer profile, and a few are enumerated below.
Vehicle Type
In Minnesota, insuring a new car is slightly more expensive than insuring an older model. Some factors rationalize this, such as the fact that newer car models have parts with new technologies, and in an accident, these parts could be more expensive to replace.
In insurance company reports within the past two months, a 2021 vehicle averages $1008 a year to be insured in Minnesota, while a 2022 vehicle averages slightly higher at $1283. Depending on the model and manufacturer, luxury cars remain the most expensive to insure.
Mileage
Vehicles with higher annual mileage figures may lead to increased premiums. This is mainly because more driving is correlated with higher risks. The more time a vehicle spends on the road, the more prone it may be to accidents.
Geographic Location
Usually, drivers in larger cities in Minnesota tend to pay higher premiums due to the volume of cars within the area, which may be a risk for accidents. For instance, the average annual insurance premium in St. Paul, with a population of 307,193, is $1,802. Meanwhile, in Minneapolis, with a population of 429,952, it is $1,831.
Demographic Factors
The insurance industry categorizes potential customers into demographic groups, with some groups labeled as "High Risk." This "High Risk" category includes teenagers and older adults, who are statistically more likely to be involved in road incidents. Policyholders who are part of this group or have someone in their household in this group may face higher premiums.
In Minnesota, teenagers can pay up to 250% more in insurance premiums than their 40-year-old parents. Additionally, young men generally pay slightly more than young women. This is because there are still more male drivers than females in Minnesota.
Driving Record
Insurance companies also evaluate traffic accidents and tickets a potential policyholder receives over a specified period as part of due diligence. If there are many traffic incidents and tickets, the premiums are higher because the policyholder will be considered high-risk. Insurers even turn down people with unsatisfactory driving records.
Because driving under the influence (DUI) or driving while intoxicated (DWI) are felony violations in Minnesota, having these on a driving record can significantly influence the corresponding insurance premium. A clean driving record may grant an insurance premium of $1520, but one with a DUI charge can jump up to $3069.
Credit Score
Some states ban using credit scores to determine insurance premiums, but Minnesota is not one of them. In Minnesota, credit-based pricing is common among auto insurers.
In this state, individuals with excellent credit scores may pay around $1,280 in premiums, while those with poor credit scores could face premiums as high as $2,861, more than double the amount.
How To Save Money on Auto Insurance in Minnesota?
Minnesotans can save money on auto insurance in several ways, including:
Discounts
Many insurance companies in Minnesota offer various discounts for those looking to buy coverage policies. It is best to contact an agent or broker to check what discounts may be available. Here are some types of discounts that may be available in Minnesota:
Defensive Driving Course
Discounts may be offered to policyholders who complete a defensive driving class. This is especially beneficial for high-risk groups, such as teenagers or drivers over 55 years old, who may qualify for reduced premium rates by providing proof of course completion.
Protective Devices
Having or installing protective devices on a vehicle may warrant a discount from an insurance company. Airbags, anti-theft devices, and anti-lock brakes are just a few examples of these. These measures protect the automobile and reduce the risk of accidents or property loss.
Bundled Policies
Bundling insurance policies means purchasing multiple policies from one provider for simpler account management. For example, you can bundle home, auto, or business insurance to get the steepest discount. Checking through different companies will provide more options in choosing the best insurance bundle.
Package Policies
On the flip side, package insurance offers a single policy that covers multiple needs, such as a combined home and auto policy. Customers may look at various insurance providers who offer package insurance as this can help them maximize package coverage.
Deductibles
Another way to lower insurance premiums is by increasing deductibles. A policyholder's deductibles are the amount they pay before the insurance coverage applies. For instance, a $500 collision deductible means the policyholder must pay the first $500 before the insurance company covers the remaining loss. The higher the amount paid, the lower the premiums.
Credit Score
As previously mentioned, a driver's credit score influences their insurance premiums. While a poor credit score may result in an upward surge in coverage rates, an outstanding credit standing leads to cheaper insurance premiums, as long as the stellar credit score is maintained.
Driving Records
A string of unfortunate accidents may negatively affect a driver's coverage prices. Similar to credit scores, maintaining a blemish-free driving record keeps insurance premiums low.
What To Do After an Auto Accident in Minnesota?
Automobile accidents can happen suddenly and are often stressful events. While ensuring safety is the primary concern, gathering information from the other drivers involved is crucial for filing an insurance claim. To effectively manage the situation, follow these steps:
Contact the Authorities
In Minnesota, drivers are required to immediately report an accident to law enforcement if it results in:
- Injury or death to any person
- Property damage of $1,000 or more
If these conditions are not met, drivers are not legally obligated to contact the police. However, it is often advisable to file a police report even for minor accidents, as it can provide an official record of the incident.
When police respond to an accident, they will conduct an investigation and create an official report. This report can be valuable for insurance claims and any potential legal proceedings.
Obtain Documentation
Gathering proper documentation after an accident is crucial for insurance claims and potential legal proceedings. Key documentation should include:
- Photos of the accident scene, including damage to all vehicles involved, road conditions, and any relevant traffic signs or signals
- Detailed notes about the accident, including time, date, weather conditions, and your recollection of events
- Contact and insurance information from all parties involved, as well as witness statements, if possible
- A copy of the police report if law enforcement was called to the scene
- Medical records, if injuries were sustained
For vehicle repairs, insurance companies may require one or more repair estimates. Drivers should check with their insurer about specific requirements. While insurers often have preferred repair shops, policyholders generally have the right to choose where their vehicle is repaired.
If multiple estimates are required, drivers should discuss with their insurer about covering any associated costs.
Individuals should keep all receipts for accident-related expenses, including towing, rental cars, and medical bills, as these may be reimbursable depending on their coverage.
Use WreckCheck for Guidance
The NAIC has developed WreckCheck, a free mobile app for iPhone and Android devices. A documented checklist is also available to help streamline the process of reporting an accident.
WreckCheck provides a step-by-step guide on what to do immediately after a car accident, helping users document the necessary information to file an insurance claim. It prompts users to capture photos and input details, as well as generate a completed accident report that can be emailed to themselves and their insurance agent.
File an Insurance Claim
When filing an insurance claim in Minnesota, individuals should first contact their insurance agent or the claims processing center listed on their Minnesota Insurance Identification Card.
Documenting the damage with photos is crucial, as is obtaining repair estimates from multiple facilities. Insurance companies may require more than one estimate, including one from their preferred facility.
For vehicle repairs, insurers typically pay for repairs if estimates are less than the vehicle's value. While policyholders can choose their repair facility, they may be responsible for paying any difference if it's not the lowest estimate.
In cases of total loss, Minnesota law requires insurers to pay the cost of a comparable vehicle, adjusted for mileage, condition, and options in the local market.
If disagreements arise over a totaled vehicle's value, policyholders can request an "appraisal process." This involves both parties hiring appraisers, with an umpire making the final decision if necessary. Policyholders bear the cost of their appraiser and half the umpire fee.
What To Do if the Claim is Denied?
If an auto insurance claim is denied in Minnesota, the claimant should first review the insurer's reason for the denial to understand the issues. Next, they should gather additional evidence to support their case, including medical records, photographs, witness statements, and official reports.
With the new evidence in hand, the claimant should submit a formal written appeal to the insurance company. This appeal should clearly explain why the denial is believed to be unjustified, present the additional evidence, and emphasize the claimant's commitment to obtaining fair compensation.
If the appeal does not resolve the issue, the claimant can seek assistance from the Minnesota DOC Consumer Services Center. They can be contacted via email or by phone at (651) 539-1600 or (800) 657-3602 for those in Greater Minnesota. Complaints can also be filed through the DOC online portal.
How Will an Accident Affect the Future Insurance Policies?
If an accident is deemed the driver's fault, their insurance rates are likely to increase, with the extent of the increase dependent on the amount of damage and whether any injuries were sustained. Unfortunately, Minnesota drivers have faced an average rate increase of 87% after an accident in the past year.
However, some insurance companies offer "accident forgiveness" programs, where the first accident will not lead to a rate increase, even if the driver is at fault. These programs are often available to policyholders with a history of good standing with the insurance provider.
For more information about auto insurance in Minnesota, check the Auto Insurance Guide booklet prepared by the MN DOC.