Minnesota Auto Injuries and Overlapping Insurance – Who Pays What?
I. Damage to your car
If the other driver was at fault, the most direct way to get your auto repairs paid is by dealing directly with the other driver’s insurer. Of course, this is only plausible if the other driver was insured. If not, you must look to your own coverage assuming you carried “collision coverage” which pays for damage done to your vehicle in a collision, regardless of fault. If you deal directly with your own insurer, it should pay for repairs or the market value of your totaled car, if the cost of repairs exceeds the market value. Your collision coverage likely has a deductible, meaning you must pay the deductible towards your own repairs, or receive less in the event of a total loss (market value less deductible).
If you elect to deal directly with your own insurer, it will likely seek reimbursement from the at-fault driver’s insurance (if any). You can expect your insurer to reimburse your deductible once it receives payment from the at-fault driver’s insurer. If you deal directly with your own insurer, you can expect full payment (less deductible), regardless of any partial fault you may have.
Minnesota is a comparative fault state, meaning if there is a dispute concerning who is at fault or if you bear partial fault, you can expect the other insurer to only offer to pay that portion of your vehicle damage caused by the fault of the other driver. For example, if your vehicle damage cost $10,000.00 to repair, but you are 10% at fault, you will receive an offer of only $9,000.00 from the at-fault driver’s insurer. When there is a fault dispute, and if you purchased collision coverage, your best bet is to deal directly with your own insurer.
II. Damage to the person or Personal Injury damages
Medical Expenses – No-fault is the First Priority Level
Every vehicle owner in Minnesota is legally obligated to carry minimum insurance coverage, including No-fault coverage. In nearly every scenario, a person injured in an auto collision (or in an auto-pedestrian collision), is entitled to recover No-fault medical expense benefits, even if they did not purchase auto insurance coverage. The minimum required coverage is $20,000.00 to treat any collision-related treatment expense. Unless you were injured on the job, No-fault is the primary insurer responsible for paying for your collision-related medical expenses. There are typically no deductibles or copays when No-fault is responsible to pay for treatment expenses.
In nearly every case, you are not responsible to reimburse the No-fault insurer, in the event you successfully recover a settlement for your injuries from the at-fault driver’s insurer.
Medicare / Medical Insurance – As a Second Priority Level
Once your No-fault medical expense benefit is exhausted, or once the No-fault insured denies payment, you may and must submit ongoing treatment expenses to any secondary insurer, such as medical insurance of Medicare (assuming you are eligible for Medicare coverage). Because No-fault is primary, once No-fault benefits are exhausted or denied, you should provide your treating facilities with a copy of the No-fault insurers “exhaustion letter” or “denial letter”, so that they may then bill your secondary payor. (Because the medical insurers know No-fault is primary, they will refuse to issue collision-related treatment payments unless provided documentation that the No-fault insurer will no longer pay).
Once No-fault medical expense benefits are no longer available, you will likely have to pay any deductibles or copays required by your medical insurer of Medicare. There is also a reimbursement obligation (by operation of state and federal law) to re-pay your medical insurer or Medicare, if you obtain a settlement with the at-fault driver’s insurer and post No-fault treatment expenses are part of your settlement. (We handle these reimbursement claims regularly and will negotiate on your behalf).
The At-Fault Driver’s Insurance Claim – As a Third Priority Level
This is required fault-based coverage in Minnesota, which covers the loss sustained to others, if the at-fault driver through carelessness, causes injury to another. Minnesota requires only $30,000.00 in third-party liability coverage. If you bring an injury claim against the at-fault driver, for a serious injury, your damages will likely include the cost of any treatment expense, not paid by No-fault, wage loss and pain and suffering damages. In most serious injury claims, your damages will likely exceed the amount of third-party liability coverage available to the at-fault driver.
First-Party Underinsured Motorist Insurance – As the Fourth Priority Level
Minnesota requires every auto policy to cover a minimum of $25,000.00 in underinsured motorist benefits. After exhausting the insurance benefits of the at-fault driver’s third-party liability coverage, you may bring a second claim against your own auto insurer if your unreimbursed damages exceed the policy limit available to the at-fault driver on his or her third-party liability coverage.
The easiest way to conceptualize this is to view it as coverage that “floats on top of” the third-party liability coverage the at-fault driver carried. Your underinsured motorist coverage generally comes from the insurance covering the vehicle you were occupying when injured. Like with the third-party liability coverage, you will probably have an obligation to reimburse your medical insurer of Medicare for treatment expense paid by it (or them) if treatment expense is part of the damage claim presented to the under insurer.
When purchasing auto insurance coverage, it is wise to purchase a policy with high first-party benefit limits. It is folly to anticipate careless drives to carry enough insurance to adequately compensate you, in the event you are seriously injured by the fault of another. Your only protection against facing ruin from an uninsured or underinsured careless driver, is to anticipate this possibility and purchase adequate first-party (uninsured and underinsured motorist) protection necessary to protect you and your family. The uninsured and underinsured motorist benefits you purchase will “follow” you and your family members, even if they are injured while occupying a poorly insured vehicle. When purchasing insurance, the first rule is to protect yourself.
I recently represented a couple who were very seriously injured in an out-of-state crossover collision. As in many states, the required third-party liability to the deceased crossover driver was very limited, and entirely inadequate to fully compensate my clients. Unfortunately, my client’s insurance agent had sold them an insurance policy with only $100,000.00 in underinsured motorist coverage. They were also sold an umbrella policy of $1,000,000.00 that covered only my client’s third-party liability coverage, meaning they were limited to receiving only the $100,000.00 in underinsured motorist coverage they purchased.
This is a prime example of an uninformed choice, perpetuated by the agent, of where to allocate your premium dollars.