What types of insurance do I need?
No Fault Insurance
What is Automobile Insurance?
An auto insurance policy is a package of different coverage models. Most states require you to purchase a minimum amount of certain kinds of coverage. But if you’re interested in protecting yourself from a lawsuit or from hefty repair bills, then it makes sense to buy more than what’s required. Below are the different types available:
Liability coverage is the foundation of any auto insurance policy, and is required in most states. 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 your legal bills. Bodily-injury coverage pays for medical bills and lost wages. Property-damage coverage pays for the repair or replacement of things you wrecked other than your own car. The other party may also decide to sue you to collect “pain and suffering” damages.
The foundation of your auto insurance puzzle is liability insurance. Forty-five states require the purchase of auto liability insurance (South Carolina and Virginia require that you register as an uninsured motorist if you do not have liability insurance; Tennessee requires proof of financial responsibility; New Hampshire and Wisconsin don’t mandate liability coverage except in certain cases). Your insurance minimum will depend on where you live. For example, in Texas, drivers have to purchase at least $20,000 worth of bodily injury coverage per person, $40,000 worth of bodily injury coverage per accident, and $15,000 worth of property damage coverage (also known as 20/40/15).
Minnesota car insurance laws
All Minnesota drivers are required to carry three types of auto insurance: standard liability, uninsured and underinsured motorist bodily injury coverage, and personal injury protection (PIP).
Minnesota is a no fault state, and PIP is the no fault part of auto insurance policy. In the event of an accident, PIP helps pay the cost of your injury-related expenses, as well as those of your passengers’, regardless of who was at fault for the accident.
Minnesota auto insurance laws require $40,000 worth of PIP coverage, ($20,000 for medical costs, and $20,000 for other related expenses, like lost wages or funeral costs). Drivers may choose to purchase higher levels of PIP for an increase in premium, or apply a deductible to the policy for a premium reduction.
No fault insurance does limit the right of an injured party to sue for damages caused by an auto accident. However, at-fault drivers can be found liable for expenses over the limit of the injured party’s PIP coverage. Liability insurance helps cover these costs, and it is required by Minnesota auto insurance laws.
Minnesota’s liability insurance minimums are 30/60/10. (That’s $30,000 per person for injuries you cause to the other party, up to $60,000 for all, and $10,000 for damage you cause to the other party’s property.)
The final coverages required by Minnesota auto insurance laws are uninsured and underinsured motorist bodily injury coverage in the amount of 25/50 ($25,000 for injuries per person, up to $50,000 total). These policies help pay for your medical expenses should you be injured by a driver with inadequate liability insurance. They apply only after your PIP benefits have been exhausted.
Collision and comprehensive 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 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 when it was wrecked.
Because insurance companies normally will not pay you more than your car’s book value, it’s helpful if you have a rough idea of this amount. Check the Kelley Blue Book or the National Automobile Dealers Association. If your car is worth less than what you’re paying for the coverage, you’re better off not having it.
Medical payments, PIP, and no-fault coverages
Medical payments (Med Pay) coverage will pay for your medical expenses as well as the medical expenses of your passengers after an accident. These expenses can arise from accidents while you’re driving your car, someone else’s car (with their permission), and injuries you or your family members incur when you are pedestrians. The coverage will pay regardless of who is at fault, but if someone else is liable, your insurer may seek to recoup the expenses from him or her.
Personal injury protection (PIP) and broader “no-fault” coverages are expanded forms of medical payments protection that may be required in your state. Some states have optional PIP or no-fault coverage. Expanded features include payments for lost wages and childcare.
If you have a good health insurance plan, there might be little need to buy more than the minimum required PIP or Med Pay coverages. And, if you already have disability insurance, there is little reason to purchase higher-than-minimum amounts of PIP.
Uninsured/Underinsured motorist coverage’s
Uninsured motorist (UM) coverage pays for your injuries if a hit-and-run driver or someone who doesn’t have auto insurance strikes you. It is required in many states.
Underinsured motorist (UIM) coverage will pay out if the driver who hit you causes more damage than his or her liability coverage can cover. In some states, UM or UIM coverage will also pay for property damages.
You’ll probably want to have at least the minimal amount of UM/UIM because if you can’t find the other driver, you’ll at least have some coverage for pain-and-suffering damages.
What is Health Insurance?
Medical Insurance pays the large expenses that can be incurred when you or a family member go the doctor, the hospital, or seek other costly medical services. Medical insurance allows you to obtain high quality medical care without severe financial hardship to your family. If you have assets, or intend to have assets, those assets can be largely taken away if you run up large medical/hospital costs. Medical insurance insures your assets and assures your access to good medical care. Listed below is a brief description of the major types of medical insurance.
General categories of Health Insurance are:
Indemnity Plans: Indemnity plans allow you to choose any doctor or hospital when seeking medical care. These plans typically have a deductible which must be met before any benefits are payable to the insured. After this deductible, the plans pay a co-insurance percentage, typically 70% to 90% of billed charges. The remainder of the bill is paid by the insured.
Preferred Provider Organization (PPO) Plans: PPO plans usually offer a large list of doctors and hospitals from which you must select in order to receive maximum benefit. These plans typically have a deductible and co-insurance like the indemnity plan. Doctors, hospitals and other medical providers generally agree to charge reduced fees in order to participate in these PPO plans. Because of this reduced fee, these plans tend to be less expensive than indemnity plans.
Health Maintenance Organization (HMO) Plans: HMO plans usually offer a smaller list of doctors from which the insured may choose. These plans generally have no deductibles or claim forms. With an HMO, you typically have a small co-pay per visit ($5 or $10) and all other charges are fully covered by the plan. Generally, each insured selects a Primary Care Doctor and that doctor is responsible for meeting your entire healthcare needs. If you need to visit a specialist, you must get a referral from your primary care doctor. HMO providers usually agree to substantially reduced charges, and these lower fees can be reflected in lower insurance premiums.
Medicare: Medicare provides coverage for people who have qualified for Social Security (usually 40 quarters of work subject to Social Security). The majority of people who qualify for Medicare become eligible at age 65. Under some circumstances, extreme disabilities may qualify a person for Medicare before age 65. Medicare provides comprehensive coverage, but can have some larger co-insurance payments than many traditional plans. Because of these co-payments, many Medicare recipients buy relatively inexpensive supplements.
What is Life Insurance?
Many of us buy life insurance, because we want to make sure our loved ones remain financially secure after we die. For those interested in estate planning, cash accumulation, wealth transfer and estate tax liquidity, life insurance can be a tool to achieve those goals as well.
There are many choices when it comes to life insurance. Policies are now available from more than 2,000 life insurance companies in the United States, as well as from banks and other financial institutions.
The two main forms of life insurance available are “term” and “permanent.”
Term life insurance
Provides coverage for a specified period of time, which usually ranges from 5-30 years depending on your need for coverage. A death benefit (coverage amount) is determined when the policy is applied for, and the beneficiary receives the death benefit if the insured individual dies while the policy is in-force.
Premiums on a guaranteed level term policy remain level for the duration of the policy. A non-guaranteed policy’s premiums will typically remain level for a pre-disclosed period of time and then increase after that.
There are usually various options available on most discount term life insurance policies, including child riders, accelerated benefits riders, and convertibility options to permanent insurance coverage.
Term life policies are designed to meet a specific need for a stated period. Term life insurance can be especially useful for anyone who has a financial liability that must be insured (like the purchase of a home).
Term life insurance is the lowest priced life insurance coverage on the market. Term life insurance offers the best life insurance value available by providing the largest amount of coverage with the least premium dollars. In comparison to permanent life insurance products (universal or whole life), term life allows you to save money on life insurance and invest the savings in a higher yielding investment.
Permanent life or Whole life insurance
Whole life insurance policies provide lifelong protection and are known by a variety of names:
Permanent Life Insurance, Standard Life Insurance, Ordinary Life Insurance, Universal Life Insurance, Adjustable Life Insurance, Variable Life Insurance or Survivor Life Insurance
As long as you pay the necessary premiums, the death benefit always will be there. These policies are designed and priced for you to keep over a long period of time.
Most permanent policies have a feature known as “cash value” or “cash surrender value.” This is a feature, which is not found in term insurance policies.
The cash values of many life insurance policies may be affected by your company’s future experience, including mortality rates, expenses and investment earnings.
Keep in mind that with all types of whole life insurance policies, the cash value of a policy is different from the policy face amount. Cash value is the amount available when you surrender a policy before its maturity or your death. Provided the cash value is sufficient, the face amount is the money that will be paid at death or at policy maturity.
What is Home Insurance?
You put a lot of time and money into your home. Home insurance is one means to protect your investment. Understanding your personal needs, you bring together a package of different coverages to provide as much protection as you feel necessary. Home insurance can protect you from damages to your home, its contents or even from financial liability if someone outside of your household is injured and you are found responsible. Taking the time now to understand that home insurance will help you to fend off potential financial misfortune in the future.
A basic home policy covers perils, which are specifically named risks such as lightning, theft, fire, smoke, wind and explosion. One thing to remember with this type of policy; any risk that is not mentioned specifically in your policy is not covered. From some insurance companies you are able to purchase special policies that cover the house for all perils except those explicitly excluded by the policy though, such as pet damage.
Standard home policy cover:
Dwelling: Residence, attached/built-in garage
Other Structures: Includes structures you own that are not attached to the house, such as storage sheds, fences and barns. Motor vehicles such as your lawn mower or motorized wheelchair are covered, but your automobile must be covered by a separate auto insurance policy.
Personal Property: Covers damage, theft (some items subject to special limits) or destruction of items such as televisions, stereos, furniture, etc.
Additional Living Expenses: Covers the additional costs of living in case you have to move out of your home and live in a hotel or rental while it is being repaired for a covered loss.
Basic Liability Insurance and Medical Payments to Others: Covers expenses in the event you are found legally responsible for damages or injuries to others, on or off your property.
Exclusions and Additional Coverage
Read your home policy carefully to find out what is excluded from coverage. In addition to excluded perils, your coverage may exclude:
Renter’s Insurance and Apartment Insurance
Renter’s Insurance policies are designed to indemnify (cover your loss) you in case of a covered loss to your personal property and protect you in the event you are responsible for bodily injury or property damage to others. It is available for apartments, rented house, condos, co-ops, dormitories, and roommate arrangements. It has been estimated 75% of Renter’s do not have coverage. Most homeowners HAVE TO. More and more landlords are requiring Renter’s Insurance as a condition to rent.
Suppose you have visitors to your apartment and someone slips on a wet kitchen floor and breaks an arm? Who is responsible for the medical costs? In most circumstances you are.
Renter’s insurance in general provides “named peril” coverage, meaning the policy states specifically what you are insured against. Some named perils include Fire or Lightning, Smoke, Vandalism or Malicious Mischief, Theft, Accidental Discharge of Water and 10 or more others. Your agent will detail these for you.
Liability coverage also includes Medical Payments coverage, which applies to nonresidents of the insured premises. This coverage pays for the actual medical expenses incurred up to the limit for a non-resident guest.
What is No-Fault?
Minnesota No-Fault Claim
No-Fault Insurance pays for most out-of-pocket losses, such as medical and chiropractic bills, lost wages and many other types of out-of-pocket loss. It doesn’t matter who caused the accident. People with serious injuries may also recover from a negligent driver for their other losses, such as pain, suffering, disability, embarrassment, and other losses. Because the No-Fault Law is complicated, this pamphlet can only provide a brief summary. ALWAYS talk to an attorney if you or a family member is hurt in an accident.
Who is required to Have Minnesota No-Fault Automobile Insurance?
All Minnesota motor vehicle owners must have No-Fault insurance except motorcycles, which only need liability coverage. You will need to have proof of insurance to obtain or renew your license plates. It is a misdemeanor criminal offense if you drive or let anyone else drive your vehicle without insurance.
What Coverages are required by insurers?
The insurer must provide the following minimum coverages:
Medical Expense Benefits: $20,000 per person. This covers almost every type of treatment available, and you can choose your own doctors. The insurer must pay your transportation costs or mileage to and from treatment.
Work Loss and Replacement Service Benefits: $20,000 per person, which covers:
Wage Loss: 85% of your gross lost income up to $250 per week. This includes lost wages while getting treatment.
Replacement Services: up to $200 per week (starting one week after the accident) to pay for household help such as housecleaning, snow shoveling and yard work. An injured “primary homemaker” receives payment for lost services, even if there is no out of pocket loss.
Death Benefits: Lost wages up to $200 per week, replacement services up to $200 per week and funeral costs up to $2,000.
These are the minimum coverages. You may buy higher coverages. If you own more than one vehicle, your insurer must offer to sell you No-Fault stacking, which multiplies all the No-Fault benefit limits.
Other Optional Coverages You May Want to Have:
What is boat insurance?
Unless you’re moving to the middle of the desert, boat owners should understand how marine insurance differs from that of your car. Though one goes by land and the other by sea, there are variations beyond the basic coverages common to both. In fact, “boat and yacht” policies can even vary between companies that specialize in marine insurance.
Liability and physical damage coverage form the core of any marine policy.
Liability Coverage. This covers legal obligations to third parties due to injury, loss of life or property damage.
Physical Damage Coverage. This reimburses for damage to the boat and its machinery. The best physical damage policy is an “all risk” which covers any cause of loss not specifically excluded in the policy, like wind storms, vandalism and collisions with the dock. Experts recommend selecting a policy that continues to cover your vessel even when it is stored or being transported by trailer.
When comparing physical damage coverage you should know whether an insurance settlement is based on “agreed value” or “actual cash value.”
Agreed Value. Reimburses the insured for the amount listed on the policy in the event the vessel is a total loss.
Actual Cash Value. Takes into account depreciation and the condition of the boat at the time of loss. The latter option provides less coverage but the premium is usually reduced.
Additional marine coverages:
Medical payments. Pays your first aid, ambulance and hospital bills in case of accident. Also covers any passengers injured on your boat.
Towing and Assistance. Pays for emergency assistance such as boat towing, emergency repairs while underway or fuel delivery at sea.
Personal Property. Reimburses for loss of personal effects, clothing, fishing gear and more.
Uninsured Boater. While not mandatory, this coverage compensates you and your passengers for injuries caused by another boat owner who carries no liability insurance.
What is motorcycle insurance?
Coverage for motorcyclists is basically the same as for automobile owners, but there are some minor differences:
Liability. Most states require motorcyclists to carry a minimum amount of liability in case of third party injuries, however insurance experts recommend purchasing as much as three times the minimum in these times of expensive litigation. The liability package also offers Guest Passenger Liability coverage that offers injury protection to anyone who might climb on the back of your bike.
Collision. This coverage reimburses for damage to your motorcycle in case of an accident – minus the deductible. Coverage extends only to the factory parts of your bike. If you get fancy and add anything extra—like nifty chrome accessories – additional coverage will be required for compensation.
Comprehensive. This reimburses you, less the deductible, for circumstances other than accident, like vandalism, fire or theft.
Uninsured Motorist. If the knucklehead who hit your bike is uninsured, this coverage pays the medical bills and any lost wages you incur while out of action.
Underinsured Motorist. This coverage reimburses you if the person who hit you doesn’t have enough insurance to cover all your damages.
What is umbrella insurance?
Umbrella Insurance is additional liability coverage that goes “over” your auto liability limits. An umbrella policy may also increases other coverages, like homeowner’s liability or boat liability. Carrying an umbrella policy is a good idea for drivers with considerable assets to protect.
Why should I consider Personal Umbrella insurance?
If you own a home or car, you protect it with homeowners or automobile insurance. However, there are instances where basic home or automobile insurance is either not enough or it excludes coverage. Depending on the situation, you may consider personal umbrella coverage.
Consider these examples:
Basic homeowners and auto insurance is usually enough for most people. However, jury awards can often reach millions of dollars in liability lawsuits. Umbrella policies are designed to help protect your current assets and your future earnings.