The state of Minnesota is one of the country’s no fault insurance states. No fault insurance works by making each individual’s own insurance company responsible for paying out the claims of their customers, regardless of who is at fault for the accident. This type of insurance is meant to reduce the amount of lawsuits for drivers seeking out damages from whoever is determined to be at fault for the collision.
Minnesota car insurance averages right in the middle in terms of premium cost for the nation. However, for the states in the middle of the country – Minnesota auto insurance rates are fairly high. In fact, Minnesota’s boundaries are filled with states that have some of the lowest rates in the United States. Iowa, Wisconsin, North Dakota and South Dakota are hundreds of dollars less a year in comparison to Minnesota drivers.
What’s the difference between Minnesota and its neighboring states? Minnesota is the only one in that area that has no fault insurance. The other states use the traditional at fault program where the driver who causes the incident is responsible for all the damages. The insurance company for the at fault drivers covers the claim and then raises the premiums for that driver since they are now considered to be a bigger risk.
Another difference for Minnesota residents is that it is the only state that requires all four types of these types of policies – no fault, liability, underinsured and uninsured motorist. Nearly all the states require liability. Around 14 of the 50 states uses no fault instead of at fault. Uninsured and underinsured motorist coverage is encouraged by all states but required for only a few. Plus, the Minnesota minimums for these policies are a bit higher than for other states.
No fault insurance in Minnesota just seems to cost more than it does in many of the other states that use this same auto insurance policy. Some of the issue could be insurance fraud – the Minnesota Department of Commerce Insurance Division is looking into putting together an insurance fraud unit to pursue these criminals and see if that lowers the premiums in this state. Many other states already have fraud departments seeking to root out individuals hoping to gain from auto insurance fraud.
Minnesota is also looking into other ways to possibly reduce premium costs including suggestions such as repealing the no fault law to match neighboring state’s at fault insurance, decreasing the amount of no fault coverage required, and forcing consumers to utilize their medical insurance before using any of their auto insurance medical coverage.