What You Need to Know About Motor Vehicle Insurance

Accidents happen. When clients come to me, they want to recover as quickly as possible. You have a life to live, and you want to get back to it. Unfortunately, many people make wrong assumptions about their automobile insurance coverage.

By the time you call me, the coverage available to you is already frozen. Whatever was in your policy at the moment of the accident is what we have to work with. That's why understanding your coverage now—before anything happens—matters so much.

So, here’s what you need to know about insurance coverage.

No-Fault Coverage and PIP

Minnesota is a no-fault jurisdiction, meaning your insurance provides you with some protection regardless of who caused the accident. The specific benefit is called Personal Injury Protection, or PIP.

If you're involved in a motor vehicle collision — as a driver, passenger, or pedestrian — PIP kicks in. It covers medical expenses, wage loss, and replacement services if your injuries prevent you from managing household responsibilities (depending on your disability and your doctor's opinions).

More PIP coverage gives us more tools to pursue your full recovery. If you’re hospitalized, you may need follow-up visits or outpatient treatment. With additional insurance, you may be able to seek that treatment without having to use your health insurance. Or, if you don’t have health insurance, now you have that additional protection.

Stacking

If your household has more than one vehicle, you can "stack" your PIP coverage. This doubles your benefit without doubling your premium, since you're already paying to insure multiple vehicles. It's one of the most cost-effective protections available, and I recommend this proactive measure for anybody.

Full Coverage

Having full coverage is such a boon. It means you can make a claim for property damage from your own insurance company right away.

You won’t have to hope that the other person had insurance, then wait for their insurance company to complete its investigation and determine that their insured is responsible. This can take 30 days—or even longer. If your car is significantly damaged, it could be towed to a yard. There will be fees to pay.

Full coverage does cost more, but the alternative could be so much worse. Without a vehicle, how will you get to work, or the store? If you have full coverage, you can elect to use it, pay your deductible, and get back to your life as quickly as possible. You can also elect to add rental car coverage.

First-party vs. Third-Party Coverage

When you look at your policy’s declarations page, the first thing you'll see is your liability coverage. This is called third party coverage, because it applies when you’re in an accident caused by somebody else.

Aside from personal injury protection and property damage, that liability limit is the amount of money that an insurance company is willing to put up to protect you. It’s called indemnification. It provides a barrier between you and somebody else, regardless of who is at fault.

It’s important to have sufficient limits so you don’t expose your own finances to someone else. Good coverage here protects you and your family.

However, first party coverage is even more important, especially if someone else causes your accident.

Say you're seriously injured, and the driver at fault carries only Minnesota's minimum liability of $30,000. If you have minimal or no first-party coverage, that $30,000 may be all we can recover. I've handled many tragic cases like this. The injuries were real and severe. The options were painfully limited. And it’s heartbreaking.

First-party coverage protects you in exactly that scenario:

• Uninsured motorist coverage applies when the at-fault driver has no insurance at all.
• Underinsured motorist coverage applies when they don't have enough insurance to fully compensate you.

Umbrella Policies

Umbrella insurance is extra insurance that provides protection beyond existing limits and coverages of your existing policy.

Most Minnesota insurers will write an umbrella policy — adding $1 million or more in coverage — for a few hundred dollars per year, as long as you already carry at least $250,000 in base coverage. That additional protection can be accessed quickly and applied to medical bills, lost wages, and potential long-term earning losses if you're disabled.

Having an umbrella can be critical to getting compensation for these losses.

Umbrella policies also have a first party, third party distinction. With a third party umbrella, if you make a claim against another driver who has both basic coverage and an umbrella, those combined limits are available for you to collect.

A first-party umbrella allows you to make a claim against your own coverage as well as the other person’s base coverage. Great first-party insurance protects you from someone else’s negligence, and that can be truly life-changing. You will have to request this separately from a third-party umbrella.

Gap Coverage

If your vehicle is financed and gets totaled in an accident, you still owe the balance on your loan — even after the car is gone. Gap coverage protects you if the value of your vehicle is less than what you owe on your loan. Otherwise, you would have to pay that out of pocket, and you would still have no car.

Review Your Coverage Now

I always recommend that people reach out to their insurance company, agent or broker to ask questions about coverage. You hopefully won’t ever need it, but you should know what is there if you do.

The three best ways to increase your protection are:

Pay for higher basic coverage. Increase your base PIP and liability coverage if you're currently at minimum limits.

Add stacking. If you own multiple vehicles, stacking is relatively inexpensive and can make a big difference in your PIP benefit.

Add first and third-party umbrella coverage. If you already have basic coverage at the $250,000 limits, add first-party and third-party umbrella policies. They can help cover the worst-case scenario.

The right coverage empowers you to make the best decisions after an accident—and it puts us in the best position to fight for everything you deserve.

We're here to help. Our team specializes in presenting personal injury claims and will walk you through every step of the process.