Why Minnesota Car Insurance Rates May Soon Increase
Considering the number of insurance companies and how competitive the industry is, policy holders might expect premiums would be going down. That hasn't happened, though, as rising insurance costs have been one of the effects of the economic downturn throughout the country. Rates have been following a steady upward movement for several years and Minnesota car insurance premiums are no exception. Generally speaking, the best way to predict future premiums is to look at the past and it's very likely Minnesota car insurance buyers will continue to see regular premium increases.
In Minnesota, one of the major factors in steadily rising insurance costs is no-fault insurance. Although the number of no-fault states has declined significantly, Minnesota remains one of the few states where no-fault insurance remains mandated. Attempts to repeal the no-fault law have been unsuccessful, so Minnesota remains a no-fault state and this has an effect on insurance premiums. When no one is judged at fault in an accident, everyone pays higher premiums to compensate the insurance companies for the losses they incur in providing this type of coverage.
No-fault insurance mandates companies provide personal injury protection coverage which all policy holders must buy. This coverage is designed to protect both drivers and any passengers who might be injured in a car accident. In Minnesota, drivers must carry $40,000 in personal injury protection coverage - broken down into $20,000 for medical and hospital expenses and $20,000 for lost wages. The payouts involved in providing this required coverage results in losses to the insurance companies and industry analysts agree is fueling the rising insurance costs seen in Minnesota and other no-fault states. No-fault, of course, has many benefits but one of its unintended effects has been to increase premiums.
Another factor impacting car insurance costs is the increasing number of driving offenses which can result either in policy cancellations or higher premiums. For example, Minnesota recently has added a new category of distracted driving offenses — texting. A higher volume of traffic offenses means higher premium rates across the state for all.
Finally, the economy continues to adversely affect Minnesota car premiums. A major element in how car insurance companies determine their rates is how much money they are able to loan from banks in order to meet their payouts. When banks aren't loaning money, insurers raise premiums in order to have more funds available to cover their costs.
With several factors working to push car premiums increasingly higher, it's important for policy holders to minimize their costs. Be sure to ask about available discounts, elect higher deductibles and shop around at renewal time. Online comparison shopping for quotes can save much valuable time.
