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Understanding Minnesota’s no-fault auto insurance coverage

On Behalf of | Apr 16, 2018 | motor vehicle accidents

Auto insurance functions as a form of protection against the potential financial costs associated with a car accident. Pooling the money from insurance premiums into a larger fund, spreads the risk of loss from an accident amongst all the people contributing to the pool.

When an accident happens, the insurance company should reimburse a person for expenses relating to the accident. In a no-fault system, drivers do not need to prove the other party’s fault to receive compensation for medical expenses.

Enacted to provide prompt financial relief

Minnesota established no-fault coverage to ensure immediate medical coverage for accident victims. The no-fault system allows accident victims to quickly recoup costs from medical expenses and lost wages directly resulting from the accident. Prior to the no-fault legislation, accident victims were forced to wait for long periods of time for benefits payments. No-fault insurance is also known as personal injury protection (PIP). Minnesota requires drivers to carry a minimum of $40,000 in PIP coverage. Half of the coverage is for medical care and the remaining portion covers lost wages and replacement services.

Understanding “no-fault” coverage

Although it has been in place for decades, no-fault coverage is commonly misunderstood. Drivers often mistakenly believe that an insurance company will cover all the losses from an accident, regardless of who was at fault. However, no-fault coverage only covers the cost of injury expenses resulting from the accident. A person’s own insurance company pays the expenses, similar to how medical insurance functions.

No pain and suffering

Although no-fault coverage pays for lost wages and medical expenses from the accident, it does not cover pain and suffering. Under the no-fault rules, drivers are not allowed to make a pain and suffering claim against their own insurance provider. However, drivers may pursue a pain and suffering recovery claim against the at-fault driver.

In order to pursue a claim, you must be able to prove the fault of the other party and meet a no-fault threshold. To meet the threshold, an accident victim must have $4,000 or more in medical expenses, permanent injury or disfigurement or the inability to work or pursue normal activities for 60 days or longer.

Although the role of an insurance company is to protect the insured driver, claims are frequently disputed. Insurance companies stay profitable by minimizing payouts while continuing to collect premiums. Those injured in an accident should seek the advice of a personal injury attorney to maximize settlement options.