Beware The “No-Fault” Insurance Myth

Question: True or false: “No-Fault” insurance cover all losses in an accident regardless of who was at fault? Therefore, I probably don’t need an attorney if I’ve been hurt in an accident.

Answer: FALSE

And that’s the No-Fault myth. No-Fault actually refers to the Minnesota statute that allows for both parties to collect from their insurance policy for some expenses like medical bills and wage loss promptly and without establishing fault. So far, so good. But here’s the fine print most people miss:

  • Full Coverage Only Meets State Minimums
    Often what is sold as “full coverage” only means your policy meets state-mandated minimums. More serious losses could easily exceed minimum coverage.

  • Your Losses Exceed Policy Limits
    If your injuries and wage loss exceed your policy limits, you will have to file a claim on the other driver’s insurance.

  • Other Motorists Under/Uninsured
    If the other driver does not have enough insurance or no insurance at all to cover your bills, you will need to file a claim on your own policy’s under/uninsured coverage.

  • Your Claim Is Disputed
    Your insurance company may dispute some or all of your claim, forcing you into a process called arbitration.

“Who is at fault?” will have a bearing on all of these scenarios, and requires an experienced personal injury lawyer to help you sort out and defend your rights.

So What Does ‘No-Fault’ Cover?

No-Fault only applies to the Personal Injury Protection (PIP) on your policy. If you are hurt in an accident, PIP covers medical costs, wage loss and replacement services (such as housekeeping) without waiting for the outcome of a lawsuit.Minnesota minimums: $20,000 for medical care, $20,000 wage loss per covered person.

Minnesota law also requires that drivers carry liability and under/uninsured coverage on their insurance policy. Liability coverage protects your assets if you are found at fault in an auto accident. Minimums: $30,000 per covered person, $60,000 per accident, and $10,000 for property damage.

Under/Uninsured coverage provides compensation for your losses when caused by another driver who has inadequate insurance or none at all. Minimums: $25,000 per covered person, $50,000 per accident.

You may also opt to carry additional insurance including Comprehensive (covers loss NOT as a result of a collision) and Collision (covers damage to your vehicle), but these are not required under state law.

Free Guide to No- Fault
The Minnesota Department of Commerce publishes a comprehensive guide to No-Fault called Auto Insurance: What You Need To Know.
Or call us at 1-800 4-RIGHTS, and we’ll mail you a copy.

Do You Have Enough Insurance?

You can always buy more insurance. The trick is to balance what you can afford with what you need to adequately protect yourself and your family. You may want to start by increasing your personal injury protection (PIP) coverage because medical and wage loss in a serious accident could easily exceed the minimum $40,000 coverage.

Again, in the interest of protecting yourself, you should increase your under/uninsured coverage as much as you can afford. In many cases, the only insurance available to compensate you is your own uninsured coverage.

You might be surprised by the low premium increase required to raise your PIP and under/uninsured coverages. Armed with this information, sit down and talk to your insurance agent about the benefits of increased coverage.

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