Auto Insurance Basics

Minnesota Automobile Insurance Plan (MNAIP)

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In Minnesota – the “Land of Ten Thousand Lakes” state – everyone who drives is legally required to carry auto insurance. If you are considered a high-risk driver due to a record of accidents, moving violations, or just a lack of driving experience, you may be turned down for auto insurance coverage in the voluntary market. If that is the case for you, you can still find insurance through the Minnesota Automobile Insurance Plan (MNAIP). Every auto insurance company in Minnesota must participate in the MNAIP. 

While you will get coverage – and thus be on the road legally – you will likely not be paying the lowest premiums for coverage through the MNAIP. Therefore, we recommend building a better driving record in order to become eligible for better rates in the Minnesota voluntary market.

What is the Minnesota Automobile Insurance Plan (MNAIP)?

A precursor to the MNAIP has been around since 1942. It was designed to guarantee that adequate automobile insurance coverage would be available to any driver who was unable to find insurance through ordinary methods. The name was changed to MNAIP in 1972.

MNAIP assigns drivers to auto insurance companies based on the market share of those insurers. So if State Farm writes 5% of the auto insurance in Minnesota, then it must cover 5% of the high risk drivers in the state. As it happens, Minnesota has a small number of drivers in the plan currently. This is due to the existence of high risk auto insurance providers, as well as standard auto insurance providers improving their methods for evaluating and covering different driver risks.

In Minnesota, every agent and broker who holds a valid license as an automobile insurer can walk you through your options if the MNAIP is where you land.

Minnesota AIP Eligibility

In order to get coverage through the MNAIP, you must certify in your insurance application that you’ve tried to find coverage within the last 60 days without success. You can apply for coverage as long as you have a valid driver’s license and a car that is registered (or about to be registered) in the state of Minnesota. And it’s important that you fill out the application accurately. If your insurer has proof to believe any information you provided is false, your policy can be cancelled.

Note that you will not be able to find coverage – even through the MNAIP – if you have failed to pay an auto insurance premium in the last 12 months. You may also be refused if your auto insurance policy has been cancelled in the last 12 months because you didn’t bring your car in for a safety inspection. Once you address these problems – pay the bill or present your car – you can apply to the MNAIP.

Minnesota AIP Coverage

Through the Minnesota Automobile Insurance Plan, you will find the same coverages that drivers in the voluntary market receive. They just may cost you more. Once you are assigned an insurer through the MNAIP, you will be covered for three years. Again, you should view that period as a time in which to improve your driving record and return to the voluntary market to have more insurer options. If at the end of 3 years you remain a high risk driver, you can re-apply to the plan, but your assigned-insurer may change. Remember you are assigned to an auto insurer based on insurance company market shares, not on your individual preference.

The mandatory minimum coverages are shown in the table below. The minimum coverages are $30,000/$60,000 for Bodily Injury, $10,000 for Property Damage, and $25,000/$50,000 for both Uninsured and Underinsured Bodily Injury. Personal Injury Protection (PIP) in the amount of $40,000 is also required. Note that you can pay a higher premium for higher levels of coverage, depending on your financial needs. 

Mandatory CoverageMinnesota Min. Required LimitsMN AIP Max. Limits
Bodily Injury (BI) $30,000 per person / $60.000 per accident $100,000 per person / $300.000 per accident
Property Damage (PD) $10,000 per accident $50,000 per accident
Uninsured Motorists BI (UMBI) $25,000 per person / $50,000 per accident Up to as hgih as your BI limits
Underinsured Motorists BI (UIMBI) $25,000 per person / $50,000 per accident Up to as hgih as your BI limits
Personal Injury Protection (PIP) $40,000 per person per accident No higher limits

Note that Collision and Comprehensive are optional coverages that your insurer does not have to provide. And if they do provide them, you will have to bring your car for inspection by an authorized insurance representative. That inspection will allow them to offer you a choice of coverage levels and premiums. Also, instead of choosing a coverage limit for Comprehensive and Collision coverage, you are choosing a deductible amount from among the choices of $100, $250, $500, and $1,000. The coverage limits equal to the actual cash value of your car, but only up to $35,000 per accident.

Optional CoverageMN AIP Min. LimitsMN AIP Max. Limits
Comprehensive Actual cash value of your car No more than of $35,000
Collision Actual cash value of your car No more than of $35,000

Minnesota AIP Premiums and Payment Plans

As a general rule, premiums for higher-risk drivers are higher than for standard risk drivers, and the same is true for Minnesota motorists. But there is no simple calculation for knowing how much higher. Minnesota auto insurers consider many factors when developing the premium for your policy. Also know that if you have one or more accidents or violations, you are likely to have a surcharge added to your premium. Minnesota law requires your insurer to show you their Surcharge Disclosure Sheet at the time you apply for insurance.

There are 2 basic options for paying your auto insurance premium. The first is to pay 30% of the annual premium up front with your application, and the rest within 30 days of receiving your policy. The second is an installment plan. In this case you must pay 40% of the annual premium up front, and the rest in 5 equal monthly installments. If you choose the installment plan, there is a $4 service charge tacked on.

Be sure to keep current on your auto insurance premium payments. Failure to pay is grounds for cancelling your policy. In the happy event that you cancel your policy through MNAIP because you have found a better price in the voluntary market, you will receive a pro-rated refund of your premium within 30 days of notifying the old insurer.

How to Apply for Minnesota Automobile Insurance Program

Because every agent and broker that holds a valid license as an automobile insurer in Minnesota can help you apply to the MNAIP, ask your agent about this option when you have been rejected for coverage by other insurers.

For more information about the MN AIP, call the Minnesota Department of Commerce at 651-539-1500 or check the Minnesota Automobile Insurance Plan website.

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