Can you get cheap car insurance in Minnesota? Yes, but you need to understand MN Insurance Requirements versus a proper insurance policy. Auto insurance rates are different based on the make, model and year of the vehicle, the information about the driver and their driving history, and what level of coverage you select.
Cheap car insurance usually means you are buying a minimal policy.
The minimum required insurance coverage is usually show as 30/60/10, but the breakdown is as follows:
- $30,000 for Bodily Injury Liability for injury of one person
- $60,000 for Bodily Injury Liability for all persons in an accident
- $10,000 for Property Damage Liability for property damage
- $40,000 for Personal Injury Protection per person per accident
- $25,000 for Uninsured Motorist Coverage for injuries for one person
- $50,000 for Uninsured Motorist Coverage for two or more people injured
- $25,000 for Underinsured Motorist for injuries for one person
- $50,000 for Underinsured Motorist for two or more people injured
Minnesota is a no-fault state which means that only personal injuries caused by an accident are covered by no-fault insurance. The personal injury protection (PIP) of your insurance policy will be used for this purpose. PIP provides for medical and wage loss benefits for you and your family.
While the cheap car insurance is the minimum to legally be on the road, smart drivers will likely choose higher limits and additional coverage, such as physical damage coverage for their vehicle. Having additional coverage could protect you and your assets in the event of a serious accident.
Think about the minimum numbers, 30/60/10. The first number (30) means $30,000 worth of bodily injury coverage. Any sort of injury will burn up $30,000 in medical bills pretty fast. The second number (60) means $60,000 worth of bodily injury coverage for ALL people injured in the accident, while the last number (10) means just $10,000 of coverage in property damage. Think about what would happen if you hit any newer car. They surely cost more than $10,000, and YOU are responsible for any costs over what the insurance covers. This could have a devastating effect on you and your family because you had cheap insurance and were under protected.
For most people, it doesn't cost much more to go from cheap car insurance to good car insurance. When you apply with us, we will always discuss with you the differences so you can make an informed and reliable insurance decision.
An Introduction to Insurance
Insurance is a way to manage risk. As you go through your life, there’s always a chance that you’ll be in a car accident, twist your knee, or that your home will burn down. The risk of these accidents is small, but if one of them were to happen, the effects could be catastrophic. Without insurance, you’d have to come up with the money on your own to repair your car, have knee surgery, or rebuild your home.
Although these things happen to some people, they don’t happen to everyone. With enough data, it’s possible to know roughly how many people are likely to experience these setbacks — and how much it will cost to recover from them. Using this info, an insurance company can spread the risk among all its customers.
Nobody likes paying for insurance. But one thing is for sure. You'll be glad you have it the day you need it.
An Elementary Example
Imagine a St Paul Elementary School with 100 students. Every year for the past 25 years, one school student has broken an arm in the schoolyard, resulting in about $5,000 in medical expenses. Without insurance, every family would have to save $5,000 to cope with the odds that their little tyke would be the one with the broken arm. At the end of the year, 99 families would have paid nothing (and have $5,000 left in savings), but one family would have paid $5,000 (and have nothing left).
With insurance, the Elementary School families can join together to spread out the risk. If they created an insurance fund, all 100 families would pay $50 at the start of the school year. This $5,000 total would then go to the family of the child with the broken arm.
By spreading the risk, each family only has to save $50 instead of $5,000. Sure, that $5,000 is gone if it’s not your child who breaks his arm, but for most people, that’s an acceptable trade. Instead of having to scrape together the full $5,000, they’d rather risk losing $50 for a chance to avoid $5,000 in medical bills.
Spreading the risk of one amongst many is the basis of insurance.
But is it really fair to have every family pay $50 into the insurance fund? Some kids go to the library at lunch to read books, while others climb around on the jungle gym. The bookworms are much less likely to break an arm, aren’t they? And maybe the 25 years of data show that girls break their arms 1/3rd less often than boys. With enough information over time, the St Paul Elementary School Insurance Fund has enough data to determine that families with boys should pay $60, while families of girls might pay only $40.
How Insurance is Like Gambling
Insurance is a bit like gambling. You’re betting a little money now because you think the odds are good that you’ll need a larger payout in the future. But there’s one huge difference between gambling and insurance: Gamblers seek risk in an attempt to get more money; when you buy insurance, your goal is to reduce risk so you don’t lose more money.
In fact, gambling casinos and insurance companies make use of the same statistical laws, especially the Law of Large Numbers, which says that the more you have of something, the more likely the characteristics of that something will tend toward average. The more people who roll the dice at the craps table, for instance, the better the casino can predict its earnings. And the more people in an insurance fund, the more accurately the insurance company can predict its profits and losses to decide what to charge in premiums.
Insurance is a Good Thing
Most of the time, using insurance to spread risk is a good thing. That’s why most states require car insurance, and why smart folks keep homeowners insurance even after their mortgage is paid off.