Automobile Insurance Coverage – Do You Have Enough?




One of the common problems we see in representing victims of car crashes is insufficient automobile insurance coverage. Minnesota law requires that automobile owners have no-fault, liability, uninsured and underinsured motorist coverages. Unfortunately, most people don’t know what these coverages are or how much they should purchase to protect them and their family. Here are a few things to keep in mind when you discuss your automobile insurance coverage with your insurance agent.

1. Medical Expense and Wage Loss Coverage
Under Minnesota law (the “Minnesota No-Fault Act”), if you are injured in an automobile accident, your own insurance company pays your medical expenses and wage-loss, irrespective of who was at fault for the collision. The typical automobile policy in Minnesota provides $20,000 in medical expense payments and an additional $20,000 in wage loss benefits. Wage loss benefits, however, are limited to 85% of your gross weekly wage, and capped at a maximum of $250 per week. For most people, that is not enough to cover one weeks worth of lost wages.

If you have two or more vehicles insured with the same company, one way to increase the total amount of available coverage is to “stack” the policies. For example, if you own two cars and have elected to stack the policies, you would have $40,000 of available medical coverage and up to $500 per week for wage loss.

2. Liability Coverage
If you are driving an automobile and cause an accident that results in personal injury to another person, your automobile liability coverage will pay the amount of those claims, but only up to the maximum amount of liability coverage which you have purchased. The minimum amount of liability coverage required in Minnesota is only $30,000 and, unfortunately, some people carry only the minimum amount. What this means, for example, is that if you carry only $30,000 of liability coverage and the injuries to the other person amount to $70,000, your insurance company will pay only $30,000, leaving you potentially responsible for the remaining $40,000. Fortunately, only few people carry minimum coverage and we find that most individuals now carry at least $100,000 of liability coverage. We believe that it is a good rule of thumb to carry at least that amount, or more, in order to protect you and your family. Obviously, the more coverage, the more protection you have.

3. Uninsured and Underinsured Motorist Coverage
Another common problem is that at-fault drivers may not carry enough liability insurance or may not have purchased any liability insurance at all. In these instances, injured persons may look to their own insurance coverage (specifically underinsured and uninsured motorist coverage) for additional compensation.

Uninsured (UM) and underinsured (UIM) motorist coverages are designed to protect you and your family when another person causes an accident and does not have adequate insurance to compensate you for your injuries and losses.

When the at-fault driver does not have any liability insurance, your UM coverage steps in and compensates you for your losses. When the at-fault driver does not have enough liability coverage, your UIM coverage steps in and pays your losses to the extent that they exceed the at-fault driver’s liability coverage. Using the same example as above, if your losses are $70,000 and the at-fault driver has only $30,000 of liability coverage, you may be able to collect the remaining $40,000 from your UIM coverage. If your losses are $70,000 and the at-fault driver does not have any insurance, you may be able to collect the full $70,000 from your UM coverage.

The minimum UM and UIM coverages allowed in Minnesota are $25,000. Fortunately, most people purchase higher amounts, and a good rule of thumb is to purchase at least $100,000 of UM and UIM coverage. Again, the greater the coverage, the greater the protection to you and your family.

If you have any questions about your current automobile policy or policies, please give us a call and we would be happy to provide assistance.