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Minnesota Car Insurance Laws & State Minimum Coverage Limits

Minnesota car insurance laws require minimum liability rates of 30/60/10 for bodily injury and property damage coverage. Minnesota has no-fault car insurance laws, which give drivers compensation for their injuries from their own insurance providers regardless of who is at fault for the accident.

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Eric Stauffer is a former insurance agent and banker turned consumer advocate. His priority is to help educate individuals and families about the different types of insurance they need, and assist them in finding the best...

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UPDATED: Jul 21, 2020

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Minnesota State FlagMinnesota ranks in the middle of the line for insurance premiums, with the average annual cost of coverage wavering around $1,241. These prices have crept up from year to year, but it hasn’t budged much in its rank According to a 2017 study by Insure.com, Minnesota has the 29th highest premiums in the country.

Only about 10% of Minnesota drivers are uninsured. Of course, this figure may be a little under-reported thanks to the way insurance laws work in the state. Drivers who are involved in accidents or engaged in a DUI do not need to file an SR-22 form. Insurers in the state do, however, report to the DMV whenever a policy is canceled or fails to be renewed.

Required Coverage & Limits

  • Personal Injury Protection (PIP) – Pays for injuries to the insured driver and his passengers, regardless of fault. The minimum required coverage is $40,000 per person. Of this, half is used for medical expenses and half for lost wages and other injury-related costs that are not directly paid to the doctor or healthcare provider.
  • Bodily Injury Liability – Pays for injuries to another driver when you are at fault for an accident. Since Minnesota is a no-fault state, this coverage generally applies to accidents with non-Minnesota drivers, or in particularly serious cases where one driver’s PIP coverage cannot pay for all of the injuries in the accident. The minimum limits are $30,000 per person or $60,000 per accident.
  • Property Damage Liability – Pays for damages that you cause to another person’s property, including other vehicles. The minimum limit is $10,000.
  • Uninsured/Underinsured Motorist – First-party injury coverages that apply when you are involved in an accident with an uninsured driver. The limits are $25,000 per person or $50,000 per accident. This coverage is applied secondarily to your PIP when you’re injured in an accident.

The above describes the bare minimum required to legally operate a vehicle in Minnesota. Most drivers will want to purchase additional protection, including first-party coverages to pay for damage to their own vehicles. If you are financing or leasing a car, this will not be optional. The lienholder will determine what coverages you need to carry. If you fail to buy appropriate insurance, the lienholder might buy coverage on your behalf and charge you on top of your car payment, which will not be an economically attractive option. You’ll almost always get a better deal if you shop for insurance yourself.

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Special Notes About Minnesota Auto Insurance

No-Fault Insurance

Altogether, there are 12 states with no-fault insurance laws. In these states, drivers receive compensation for their injuries from their own insurance providers regardless of who is at fault for the accident. In other areas, called tort states, the injured driver may need to sue the at-fault driver or his insurer in order to get injuries paid.

Despite all drivers being required to carry personal injury protection insurance, Minnesota state law also requires drivers to carry bodily injury liability coverage. There are two reasons for this:

  1. The first is that drivers and passengers who sustain very serious injuries from a car accident can sue the at-fault driver for pain and suffering even when their own insurance covers their medical expenses.
  2. The second reason is that a Minnesota driver may sometimes be in the situation of colliding with a driver who does not carry PIP – for example if you’re driving in a different state or get into an accident with an out-of-state driver yourself. In these cases, bodily injury liability insurance protects you from being held personally liable for things that PIP does not cover.

Insurance Fraud in Minnesota

Normally, no-fault insurance laws help to decrease the number of fraudulent insurance claims since there is no reason to fake injuries in hopes of costly lawsuits. However, a few loopholes in the Minnesota insurance law have made a certain type of insurance fraud more common, and the state is still working to combat this issue.

In Minnesota, no-fault payments are made directly to the medical care provider after an accident. The doctor or chiropractor would provide care and bill the car insurance company, which would then pay the claim out of PIP. However, a study suggests that some companies are profiting from this by aggressively courting car accident customers, providing minimal treatments, then billing the insurance company for significantly more than the actual cost of treatment.

This scheme and other types of insurance fraud are partially responsible for the increased cost of auto insurance in Minnesota, where premiums are driven up to offset these artificially inflated costs. Several types of insurance reform may be put into action to curb these expenses, although the heart of the no-fault law is unlikely to change anytime soon.

Rental Car Coverage

In many states, your collision coverage will transfer to a rental car. This means that if you are in an accident with a car you’ve rented, you will pay your deductible and have the vehicle repaired just as you would for your own car. If you don’t carry collision on your policy, you’d need to pay for a collision damage waiver from the rental company.

Minnesota is one of the few states that handles this differently. In Minnesota, damage to a rental vehicle is paid for under property damage liability coverage. This means that you would not pay a deductible for damages caused to a vehicle that you rented. Additionally, you are not required to pay for a collision damage waiver or similar protection offered by the rental company, and rental contracts in Minnesota must state this.

Insurance Verification

Throughout the country, it is illegal to operate a vehicle without insurance. Different states enforce this law in different ways. Most of the time, it’s impossible to obtain a driver’s license or register a vehicle without carrying insurance. Some states also require an SR-22, or proof of insurance form, to be sent to the DMV whenever a driver is involved in an auto accident or is caught driving under the influence of alcohol.

Minnesota does not use the SR-22. Instead, it relies on reports from insurance companies about policy cancellations. The state DMV also sends out randomized letters to drivers from time to time requesting proof of insurance as a way to canvas a cross-section of the state’s driving population.

Teen Driving Rules & Laws

Like many states, Minnesota uses a graduated driver’s licensing system. The requirements for obtaining a driver’s license will vary depending on an applicant’s age.

For applicants under the age of 18, the first step is to complete a driver’s education course with both a classroom and behind-the-wheel component. Once the course is completed, the teenager can take a written test. If the test is passed, the driver will obtain a permit.

The permit is subject to a few limitations:

  • The permit holder must have a parent, guardian, instructor or another licensed driver over the age of 21 in the vehicle at all times.
  • Everyone in the vehicle must wear a seatbelt.
  • The driver with the permit cannot use a cell phone while driving, even if there is a hands-free device, unless it is an emergency
  • You must complete 50 hours of driving with your parent or guardian, who will supply a log of your driving hours. Of the 50 hours, 15 must have been driven at night.

After you’ve practiced driving with the learners permit for 6 months, you can take a driving skills test. You must be at least 16 years old to take this test. If you pass, you will receive a provisional license.

The provisional license is similar to the learner’s permit in that drivers must not use cell phones and all passengers must wear seatbelts. However, a provisional license allows young drivers to drive without their parents being in the car. You must carry a provisional license for at least one year with no alcohol/drug violations or traffic violations. After this year-long probation period, you can obtain a full, unrestricted driver’s license.

If you apply for a driver’s license after age 18, you can skip the driver’s education requirement and obtain your instruction permit immediately. You’ll need to use this permit for six months if you’re 18, and three months if you’re 19 or older before you can take the road test.

If you wait until you’re 21, you can take the road test at any time after receiving an instruction permit.

Drivers of all ages must have an instruction permit in order to drive legally before receiving a license. Waiting until you’re older simply reduces or eliminates the amount of supervised driving time that you must log before advancing to an unrestricted license.

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About Eric Stauffer

Author: Eric StaufferI am a former insurance agent and banker turned consumer advocate. My priority is to help educate individuals and families about the different types of insurance they need, and assist them in finding the best place to get it.

2 Comments

  1. I own my car and I have myself listed on my auto insurance. I was told by the insurance company that I have to list my incarcerated husband, who also does not have a driver’s license to my insurance policy because we are legally married. This caused my premiums to go up. I guess I could not argue that since they told me I HAD to.
    Now, my daughter who is almost 19, she lives with me but does not drive my car. I am now told that I HAVE to add her to my policy as well. She does not stay here but is looking for her own permanent place to live and vehicle also. Is it the law that I have to have her on my auto insurance policy just because her address is listed on her driver’s license as my household?

    Reply
    • Hi Melissa,

      I would find a local broker that can sell policies for multiple insurance companies and talk to them. In most states, you can specifically exclude drivers from your policy, and if they drove the car it would be the same as being uninsured.

      Go talk to a broker, not a captive agent that sells policies only for one company.

      Best,
      Eric Stauffer

      Reply

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