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Auto Insurance Coverage Explained...

August 27, 2015 by novallus

... with Real World Examples - Series Part 1.

We’re bombarded with advertisements about saving money on our auto insurance. Click here to save 15% on your car insurance, I just double checked my discounts and saved $500, etc. We’re led to believe that auto insurance is a commodity where one size fits all. This isn’t the case. We’re a do it yourself culture. Selecting insurance coverage without educating yourself is dangerous.

This blog series takes a step by step approach through each component of the auto insurance policy. We will explain each coverage in everyday language and give an example of when you would use it. Our goal is for you to be educated to help make the best decision on your coverage. Once you find the right coverage, then find the right price.

To drive your auto on Minnesota roads, you need liability insurance. The Minnesota state minimum requirements are currently:

$30,000 bodily injury per person, $60,000 bodily injury per incident (accident), $10,000 property damage. We’ll call these state minimum going forward.

It your reaction isn’t “Wow, that’s not a lot,” it should be.

Bodily Injury liability protects you if you injure or kill someone while operating your automobile. If a party in the accident files a lawsuit against you, it also provides for a legal defense. Bodily injury liability covers injury to people, not your vehicle. Typical expenses covered include medical expenses, legal fees, loss of income, pain and suffering, and funeral costs. More on medical expenses and loss of income in our Personal Injury Protection (PIP) segment.


You’re driving and talking on your phone. You don’t see the traffic stopped for a lane closure until it’s too late. You hit a car. Inside are the driver and one passenger. Both are hauled off in an ambulance. The driver sustains minor injuries, $5,000. The passenger needs surgery, $40,000.  With state minimum limits, you are responsible for $10,000. Your limit of $30,000 per person was exceeded, even though you were under the $60,000 per incident limit.

Property damage liability protects you if your automobile damages someone else's property. If a party in the accident files a lawsuit against you, it also provides for a legal defense. You should have enough property damage liability to protect you from the amount of damage your auto might inflict on another vehicle or object. Remember, property damage liability covers other people’s property, not your own.


Same accident as above. The car you hit is a 2015 Honda Accord with an MSRP of $22,105. With state minimum limits, you are responsible for $12,105. Your property damage limit of $10,000 was exceeded.

In the event of a serious accident, you want enough insurance to cover a judgment against you in a lawsuit without jeopardizing your personal assets. Don't wait until an accident to understand your policy. Contact us today to find the option that best meets your needs.  We’ll talk about the different liability limits in our next segment. Remember – coverage can vary by policy type and state. Always refer to your policy for explanations of your coverage.

Photo Credit: https://www.flickr.com/photos/aaronpk/

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