A Guide to Understanding Auto Insurance Coverage

A Minnesota Driver’s Guide to Understanding Auto Insurance Coverage

Car insurance isn’t the most exciting part of owning a vehicle, but it might be the most important. If you live and drive in Minnesota, understanding how your auto insurance policy works—and how it protects you—is essential.

This guide covers what you need to know about required coverage in Minnesota, common optional add-ons, and how factors like driving history, vehicle type, and location affect your premium.

Why Car Insurance Is Mandatory in Minnesota

Like most states, Minnesota requires drivers to carry auto insurance to legally operate a vehicle. But unlike many states, Minnesota is a no-fault state, which means your own insurance pays for your injuries after an accident—no matter who caused it.

This system is designed to reduce the number of lawsuits over small accidents, but it also makes the types of coverage you carry even more important.

Minimum Coverage Requirements in Minnesota

The minimum liability coverage required by Minnesota law includes:

• $30,000 per person for bodily injury
• $60,000 per accident for bodily injury (total)
• $10,000 per accident for property damage

In addition, no-fault (also known as Personal Injury Protection or PIP) is mandatory:

• $40,000 per person for injury-related expenses (includes $20,000 for medical expenses and $20,000 for lost wages, replacement services, or funeral expenses)

Other mandatory coverages:

• Uninsured Motorist Coverage (UM) – $25,000 per person / $50,000 per accident
• Underinsured Motorist Coverage (UIM) – Same limits as UM

These minimums are the legal baseline—but they’re not always enough.

Common Optional Coverages

Many drivers choose to add extra coverage for better protection. Here are some of the most common options:

1. Collision Coverage

Pays for damage to your car if you hit another vehicle or object, regardless of who is at fault.

2. Comprehensive Coverage

Covers damage not caused by collisions, such as theft, hail, fire, or hitting a deer (a real concern in Minnesota).

3. Gap Insurance

If your car is totaled and you owe more than it’s worth, gap insurance pays the difference between your loan balance and the car’s value.

4. Rental Reimbursement

Covers the cost of a rental car while your vehicle is in the shop due to a covered claim.

5. Roadside Assistance

Helps with towing, dead batteries, flat tires, or lockouts.

6. Custom Equipment Coverage

If you’ve added aftermarket parts or stereo systems, this covers the additional value.

How Premiums Are Calculated in Minnesota

Auto insurance rates vary for every driver. Insurers consider a combination of personal and vehicle-related factors:

• Driving record: Accidents and tickets increase your rates
• Vehicle make and model: Expensive cars cost more to insure
• Where you live: Urban areas often have higher rates due to more traffic and theft
• Age and gender: Young drivers typically pay more
• Credit score: Used by many insurers to assess risk
• Coverage limits: More protection usually means higher premiums
• Deductibles: Higher deductibles can lower monthly costs

Each insurance company weighs these factors differently, which is why quotes can vary significantly.

What to Do After an Accident in Minnesota

If you’re involved in a crash, take the following steps:

1. Check for injuries and call 911 if needed
2. Move to safety, if possible
3. Exchange information with all parties (license, insurance, contact info)
4. Document the scene with photos and notes
5. Notify your insurance company and file a claim promptly
6. Cooperate with any investigation, but avoid admitting fault

In a no-fault state, your own insurance company pays your medical costs, even if another driver caused the crash. However, serious injury cases may still involve legal action.

When to Reevaluate Your Policy

Review your auto insurance policy:

• Annually, even if nothing has changed
• After buying or selling a vehicle
• When moving to a new ZIP code
• After a significant life event (marriage, teen driver, etc.)
• If your financial situation changes
• If your credit score improves

Being underinsured can be just as risky as having no insurance at all.

Tips to Save on Auto Insurance

Here are several ways Minnesota drivers can reduce premiums without sacrificing coverage:

• Bundle your policies (e.g., home + auto)
• Ask about discounts for safe driving, good students, or low mileage
• Raise your deductible if you have savings to cover it
• Shop around—quotes can vary dramatically
• Take a defensive driving course
• Maintain a good credit score

Understanding your car insurance policy isn’t just about checking a box—it’s about knowing what protection you actually have. Minnesota’s unique no-fault system makes certain types of coverage more important than in other states, and local factors like winter hazards or deer collisions also shape the kind of policy that’s right for you.

By taking the time to understand your options and reviewing your policy regularly, you can avoid common gaps in coverage and stay protected on the road—no matter what Minnesota throws your way.

Minnesota Department of Commerce:

Reach out today for a free, no-pressure review. We’ll help you feel confident that your insurance is ready for whatever life throws your way.