Are you protected from a lawsuit or high repair bills if you were in an accident? Minnesota requires you to purchase minimum amounts of certain kinds of coverage, but how well does that actually protect you? Your auto insurance policy is a package of different coverages which include:

  • Liability Insurance
    • Liability coverage is the foundation of any auto insurance policy. If you are at fault in an accident, your liability insurance will pay for the bodily injury and property damage expenses caused to others in the accident, including legal bills.
    • The state minimum insurance limit may not cover you adequately. That’s why it’s a good idea to buy more than what your state requires. If you own a home and have a nest egg and a savings account, you should consider more liability insurance. In most states, drivers are allowed to sue other drivers who injure them in car accident. If you’re sued and your liability insurance doesn’t pay for all of the damages, your personal finances are on the hook, and it’s likely you’ll become a target.
  • Collision Coverage
    • If you cause an accident, collision coverage will pay to repair your vehicle. You usually can’t collect any more than the actual cash value of your car, which is not the same as the car’s replacement cost. Collision coverage is normally the most expensive component of auto insurance. By choosing a higher deductible, say $500 or $1,000, you can keep your premium costs down. However, keep in mind that you must pay the amount of your deductible before the insurance company kicks in any money after an accident.
    • Insurance companies often will “total” your car if the repair costs exceed a certain percentage of the car’s worth. The critical damage point varies from company to company, from 55 percent to 90 percent.
  • Comprehensive Coverage
    • Comprehensive coverage will pay for damages to your car that weren’t caused by an auto accident:
      • Damages from theft, fire vandalism, natural disasters, or hitting a deer all qualify. Comprehensive coverage also comes with a deductible and your insurer will only pay as much as the car was worth at the time of the claim.
  • Personal Injury Protection (PIP)
    • Personal injury protection (PIP) and broader “no-fault” coverages are expanded forms of medical payment protection that are required in Minnesota. Minnesota PIP includes payments for lost wages and essential services (such as housekeeper or child care).
  • Uninsured/Underinsured Motorists Coverage
    • Uninsured motorists (UM) coverage pays for any bodily injury settlements you would obtain if you’re struck by a hit-and-run driver or someone who doesn’t have auto insurance.
    • Underinsured motorists (UIM) coverage will pay out if the driver who hits you causes more bodily injury liability damage than his or her liability coverage can cover.
  • Supplemental Coverages
    • Several supplemental auto coverages are available:
      • Rental reimbursement, covers vehicle rentals required because your car is damaged or stolen.
      • Coverage for towing and labor charges in case of a road breakdown is also common.
      • Gap coverage for your new car will pay the difference between the actual cash value you receive for the car and the amount left on your car loan if your vehicle is totaled in an accident.
  • In basic terms:
    • Liability coverage, if you are at fault, pays for the bodily injury you become liable for someone in the accident.
    • Collision coverage pays to repair your vehicle from damage caused by collision with another vehicle or stationary object.
    • PIP coverage pays for medical bills and lost wages.
    • Property-damage liability coverage pays for the repair or replacement of things you damage other than your own car. The other party may also decide to sue you to collect “pain and suffering” damages.



Liability coverage limits are usually presented as a series of three numbers. For example, your policy says you liability limits are 30/60/10; that stands for $30,000 in bodily injury coverage per person, $60,000 in bodily injury coverage per accident, and $10,000 in property-damage coverage per accident.