The short answer is because, in the event of serious injury, YOU may not be compensated adequately when you are not responsible for the accident and YOU may be personally liable (your pocket) when you are responsible for the accident. Read on…
Minimum Coverage Requirements in MN:
| Type of Coverage | Minimum Amount Required |
| No-Fault/ Personal Injury Protection (PIP)* | $40,000 per person per accident ($20,000 for hospital/medical expenses and $20,000 for non-medical expenses such as lost wages, replacement services, etc.) |
| Liability | $30,000 for injuries to one person $60,000 for injuries to two or more people $10,000 for physical damage to the other driver’s vehicle or for damage to property |
| Uninsured* | $25,000 for injuries to one person $50,000 for injuries to two or more people |
| Underinsured* | $25,000 for injuries to one person $50,000 for injuries to two or more people |
*not required for motorcycles, see each individual policy for coverage and conditions.
Why You Should Pay for More Coverage:
Looking out for #1: Let’s say you (God forbid) suffer permanent injury. It is all too common that an injury caused by another driver will not have adequate insurance coverage to compensate you for your total damages (past and future medical costs, pain and suffering, and loss of earnings and earning capacity) because the driver only had the state-required minimum of $30,000. Now what? Next we look to your underinsured policy. Oh no! You only purchased the state-required minimum of $25,000. You recover $30k from the at-fault drivers liability policy and $25k from your UIM policy. So, that’s only $55,000 total for your damages, but you could end up with zero! Your total net? Consider this example:
- $55,000 total award;
($18,000) attorney fees subtracted;
($5000) reimburse attorney for out-of-pocket costs;
$32,000 subtotal: this is that you wish you could net;
($32,000) in subrogation claims**, for example (your health insurance lien to get reimbursed);
GOOSE EGG! You get nothing because you had cheap insufficient coverage.
**however, we are experts at negotiating subrogation claims and other liens and can often net our clients significant money, even in the event of harsh subrogation claims/liens
Looking out for #2 (and #1 again): Same scenario as above, but the roles are reversed. YOU are liable for negligence causing permanent injury to another and, because of your cheap minimum policy of $30,000 the other driver never gets adequately compensated for the injuries that YOU caused. You never know what, if any, underinsured coverage the other driver might have. Furthermore, YOU are now potentially personally liable (that’s right, your pocket and not your insurance policy) for the damages in excess of the piddly $30k in coverage. Even the injured driver’s UIM carrier can sue you for what they pay out!
What to do about this? I recommend having as high of policy limits as you can afford and consider an umbrella policy to cover all sorts of things, including additional underinsured/uninsured policy limits in excess of $1 million. You should consider how it would feel to permanently injure someone and not have adequate liability coverage. You should consider your exposure to personal liability such as your assets and future earnings that could be taken. For your UIM/UM policy, consider how many people don’t take these things in to consideration and cover yourself in the event you are struck by an underinsured or uninsured driver. I would carry a $500k per person/$1 million aggregate for liability, and between my UIM/UM policy and umbrella policy I would have over $2 million in coverage.
What is PIP/No Fault? This coverage is less tricky. Click here for an article on PIP/No Fault. If you are involved in a motor vehicle accident, whether you are at fault or not, you should contact an experienced Minnesota personal injury attorney to be sure that you are receiving the full benefit of your insurance coverage and to see if you have a claim against the other driver’s insurance as well. Give us a call at 763-682-1324 or contact us.
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