Ranked 22nd in the country for insurance costs, Minnesota car insurance is in line with the national average for cost. The average policy in the state costs $1,614 per year, although an individual’s policy cost may deviate substantially depending on his driving record and other factors. There are several factors influencing the cost of insurance, and taking the time to understand them will help you find affordable coverage.

How do Minnesota car insurance companies calculate cost?

Auto insurance costs are calculated by analyzing your unique risk profile which consists of individual, demographic and geographic factors. The higher the risk of a claim being filed, the more a policy will cost. On an individual level, risk is assessed based on a driver’s history of accidents, traffic citations and DUI violations. It is also determined by his age, marital status, credit score and other factors. On a geographical basis, car insurance companies calculate risk by the population of uninsured drivers, number of DUI accidents in an area, weather patterns, crime rates and other factors.

Minnesota has a moderate rate of uninsured drivers. Approximately 12 percent of motorists in Minnesota operate without insurance. While certainly not a low figure, this is substantially lower than in some of the most expensive insurance states, where uninsured motorists can make up more than a quarter of an area’s population. Uninsured drivers cause insurance rates to raise in an area because insurance companies lose money on claims involving them. Whenever an uninsured motorist hits another driver, the other driver’s insurance must cover the cost of repairs, often with no chance of recovery. This leads to lost profits for the insurance company, and these profits must be recovered by raising rates throughout the state.

Minnesota also has a moderate rate of drunk driving. In 2009, 161 people were killed in drunk driving accidents, accounting for 31 percent of all traffic fatalities. For a state as geographically large as Minnesota, this is not an exceptionally high number; many states report drunk driving deaths in the thousands, or have DUIs making up over 40 percent of fatalities.

Vehicle-related crime is not a major issue in the state. It’s ranked 34th in the country for vehicle theft and 34th for crimes against property, making vehicles in the area substantially more secure than in other areas. Weather does play a role in setting insurance premiums, however; Minnesota is prone to winter weather that contributes to the overall number of accidents each year. Snow and ice are a major factor in causing collisions, especially single-car accidents.

Individual policy requirements also play a role in determining the cost of insurance in a state. Each state sets its own limits for insurance coverage, and states with high limits will cost more on average than states requiring less insurance. When identical policies are compared between states, the price disparity reduces significantly.

Minnesota Car Insurance Requirements

Drivers in Minnesota must carry a minimum of $10,000 in property damage liability insurance, with bodily injury limits at $30,000/ $60,000 per accident. This coverage pays for injuries and damage caused to another person when you are at fault for an accident. Minnesota is a no-fault state, however, so an individual’s own insurance must cover his injuries primarily. Nevertheless, it’s a good idea to increase the limits of your property damage coverage at least as you can still be sued for damage you cause over the limits of your insurance.

Because Minnesota is a no-fault state, all drivers must also carry personal injury protection (PIP) coverage of at least $40,000. This pays for an insured’s injuries whenever an auto accident happens. There are also limitations to whether a driver can sue for medical bills in this state.

Minnesota also requires all drivers to carry uninsured motorist coverage for injuries. This takes the place of another person’s bodily injury liability insurance and may be used in some situations to provide additional coverage for injuries in severe accidents, whether or not an uninsured driver was involved.

Optional coverage in Minnesota includes collision, comprehensive, rental reimbursement and towing coverage. Drivers who are making payments on their vehicles will need to purchase collision and comprehensive, collectively known as full coverage auto insurance. Full coverage is optional for people who own their vehicles outright, but it is a good idea to carry it if your vehicle is new or valuable.

Considering the amount of coverage required in the state, premiums are actually quite affordable in Minnesota. Drivers can save more money on car insurance by comparison shopping for a quote online.