Minnesota car insurance requirements to obtain a driver's license requires you to carry certain coverages on your auto insurance policy in order to remain a legal driver. In addition to the requirement of Liability, Uninsured Motorist, and Underinsured Motorist coverage, you must also carry Personal Injury Protection (PIP), better known as No-Fault insurance. The set of regulations for Minnesota car insurance is the only one in the country requiring its drivers to have all four of these coverages. Let's take a closer look at this coverage and how it affects you.
Like anything else, the Minnesota car insurance system has its pros and cons, and there are definitely some critical opinions about the subject. The major advantage is the fact that drivers involved in accidents don't have to wait for lengthy subrogation to take place between insurance companies to determine which driver is at fault before their expenses are paid. Each driver's policy pays for his or her own expenses up to their policy limits regardless of fault.
The greatest proposed weakness of the system is that this type of coverage does not encourage safe driving habits and thus results in higher accident-related fatalities, a reasonable deduction since no one party is actually penalized by being considered at fault for their role in an accident. Studies of No-Fault states haven't produced enough consistent results to confirm this, however.
One thing is certain - No-Fault Minnesota car insurance costs policyholders a lot of extra premium dollars. The cost for this coverage accounts for approximately 12 percent of insurance premiums in Minnesota. This is due to the high cost of claims for these types of accidents each year. According to statistics, over half of the medical expenses paid for by PIP in the state are for chiropractic care. Auto insurance premiums in neighboring states not requiring No Fault Insurance are significantly lower.
No Fault Insurance pays for your covered expenses if you are involved in an accident, no matter who may be at fault. The state requires drivers to carry a Minnesota car insurance minimum of $40,000 ($20,000 for medical coverage and $20,000 for non-medical expenses). Non-medical expenses can include lost wages, replacement vehicle, and mileage reimbursement. The coverage extends to any licensed drivers in the household that are involved in a covered accident. Twenty-three states currently have no-fault laws, but the coverage is optional in Kentucky, New Jersey, and Pennsylvania.
In February of 2005, the Minnesota Department of Commerce submitted a study of the impact of No-Fault insurance on claims and premiums to the State Legislature. One of the recommendations for a solution to the problem was repealing the No-Fault laws altogether. This has not happened so far. They also recommended lowering the required amount of Minnesota car insurance coverage as well as making No-Fault coverage secondary to the injured party's medical insurance. To date, Minnesota still has one of the country's highest levels for auto insurance rates and claims.