Many people are aware that Minnesota is a “no-fault state”, but often this is misunderstood. Some people assume that this means that no one can be at fault in a car accident. Other speak about insuring their vehicle for “no-fault” only. Neither of these concepts are accurate.
No-Fault auto insurance is a system where if you are hurt in an auto accident, your own auto insurance policy must cover your initial medical bills, wage loss and/or funeral expenses, up to the limits specified in the policy. In this situation, your Auto insurance carrier must pay for your injury regardless of whose fault the accident was. Hence the term “no fault”.
No-Fault laws were originally passed in Minnesota and certain other states to give people quicker and more reliable coverage for medical care after a car accident, without sometimes having to go through the lengthy and expensive process of a lawsuit to get their medical bills paid. Because your own auto insurance pays for your initial medical bills (up to the policy limit), you won’t have to wait many months or even years for a judgement or settlement, with those bills hanging over your head in the meantime.
However, Minnesota being a no-fault state does not mean that no one is at fault in an auto accident. While you must look to your own Auto insurance policy to pay your initial medical bills regardless of fault, you may still look to the other party’s insurance to cover damage to your vehicle, if the other party was at fault.
In addition, if your medical bills exceed $4000, you may still file a claim against the at-fault party for additional financial compensation for your injuries, such as for pain and suffering and other economic loss not fully covered by your own auto insurance. You can also sue for medical bills that exceed the $20,000 medical limit* on your policy.
As you can see, Minnesota being a no-fault state does not mean that you don’t need to purchase adequate Liability limits on your Auto policy. In a serious accident, the $20,000 no-fault medical limit* the other party might carry could be just a drop in the bucket compared to the entire amount of their injury claim against you.
Sometimes a client will ask for no-fault coverage only on their vehicle. For many, this is just a way of saying they want only the basic coverages they are required by law to carry. But technically, no-fault medical (called Personal Injury Protection coverage or “PIP” for short) is one of just three required coverages in our state; the other two are Liability and Uninsured/Underinsured Motorist Bodily Injury.
This post provides basic details regarding Personal Injury Protection (PIP) coverage in Minnesota as it exists at the time of posting. PIP coverage varies from state to state, and this information may not be accurate in other no-fault states.
*Minnesota law requires all Auto policies to provide a minimum of $20,000 in medical coverage within the PIP benefit. While most policies we see carry this limit, some policyholders purchase an increased limit or stacked PIP benefits, which also serve to increase the amount of medical coverage available under PIP.
About the Author
Agent Ken Cobb
Ken is the owner and principal agent at Pine Country Insurance in Bemidji. Active in the insurance industry since 2000,Ken uses his years of personal insurance knowledge and experience to assist clients in customizing insurance coverage to fit their needs. Ken considers himself a "farmer" rather than a "hunter"; rather than focusing on writing a lot of new policies as quickly as possible, he works on cultivating long term relationships based on trust with his clients. When writing new policies and meeting for annual reviews, Ken spends time with his clients explaining and helping them understand their insurance, and he is also pleased to share his knowledge with his blogging audience as well.
Ken Cobb is owner of Pine Country Insurance and has been active in the insurance industry for over 15 years. Meet Ken.
Coverage descriptions found in this blog are summaries provided for general educational purposes and cannot fully detail the terms, conditions, limitations or exclusions of a specific insurance policy. Please read your policy carefully.