What’s in my Automobile Insurance Policy?
Minnesota law requires every automobile owner to insure his or her vehicle. But what exactly are you getting when you buy automobile insurance? Have you ever actually READ your insurance policy?
You really should read the policy yourself, as well as discuss with your agent whether you have the coverage you need. Meanwhile, here’s a short summary of WHAT’S IN YOUR AUTOMOBILE INSURANCE POLICY:
Collision Coverage (optional coverage you must ask for): Collision coverage pays to fix or replace your car if it is damaged in an accident. Your insurance company must pay the cost to repair the vehicle, or the value of the vehicle (in insurance lingo “totaling the vehicle”), whichever is less — minus your deductible. If the accident was NOT your fault, your insurance company will collect the property damage amount from the at-fault driver’s insurance company, and you will be reimbursed your deductible.
Liability Coverage (standard coverage in every Minnesota auto policy): This coverage applies if you are in a car accident and the accident is YOUR FAULT. Your liability coverage pays for the following:
Property damage: If you have damaged the other driver’s car, your insurance company will pay to fix or replace that car, up to your policy limits for liability property damage. Bodily Injury (“BI”): If someone is injured in a car accident that is your fault, the injured person may have a claim against you for compensation for his or her damages. The liability portion of your policy pays for any damages the injured person may have — up to your policy limits. Most policies in Minnesota provide a minimum of $30,000 per person/$60,000 per occurrence. However, you should consider increasing this to better protect your assets in case you cause a serious car accident, and because when you purchase more liability coverage you usually get more UM/UIM coverage (see below) to better protect you if you are the victim of a serious car accident.
No-Fault Benefits (standard coverage in every Minnesota auto policy) – also referred to as “PIP” benefits: Minnesota law requires your auto policy to pay the first $20,000 in medical expenses and $20,000 in wage loss benefits if you are injured in a car accident. You are entitled to these benefits REGARDLESS OF WHO IS AT FAULT (hence the name “No-Fault” benefits), and your insurance pays this even if the other driver is completely at fault.
Uninsured Motorist Benefits (standard coverage in every Minnesota auto policy) – also referred to as “UM” coverage: If the other driver is at fault but is UNINSURED, or you are struck by a hit & run vehicle, then your insurance company will pay what the other driver should have paid you in compensation for your injuries. In other words, your insurance company will act as if it is insuring the other driver. (The uninsured driver won’t get away scot-free, however, because it is a crime to drive without insurance, and your insurance company can sue the other driver to get its money back.) Most often, the amount of coverage you have available for uninsured motorist benefits is the same as what you purchase for liability benefits.
Underinsured Motorist Benefits (standard coverage in every Minnesota auto policy) – also referred to as “UIM” coverage: If the other driver is at fault but doesn’t have enough insurance to fully compensate you for your injuries, then you are entitled to UNDERINSURED MOTORIST BENEFITS from your insurance company. Your insurance company will pay for your damages not compensated by the at-fault driver, up to your insurance limits for UIM coverage. Like UM coverage, the amount of UIM coverage you have is the same as what you purchase for liability benefits.
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