Why Minnesota Car Insurance Rates Could Rise In 2012

There are a lot of insurance companies, and whether small or large, local or international, they are all very competitive. Because of that, a policy holder might expect his business would be so valuable that he would see lower and more competitive quotes on his premiums. He might actually expect to get cheap car insurance. However, that isn't what has happened. Across the board, one of the side effects of the economic recession has been rising insurance costs. In recent years, there has been a slow, constant upward pressure on car insurance rates. Minnesota car insurance rates have not been immune. It's a safe bet that the future is going to look like the past and that 2012 will see another rise in Minnesota car insurance rates.

One of the reasons Minnesota is in the midst of steadily rising premiums is due to being a no-fault insurance state. Although there's been significant erosion in the number of no-fault states, Minnesota remains one of the few where no-fault insurance is still the law. Attempts have made to repeal the no-fault law, but so far, they have not been successful. For now, Minnesota remains a no-fault state with the predictable effect on its insurance premiums. Since no one is assigned fault in an accident, all policy holders have to pay higher premiums so insurance companies can recoup the losses they sustain as a result of being required to offer no-fault coverage.

No-fault insurance mandates that all policy holders must buy personal injury protection coverage. It is aimed at protecting both drivers and passengers who may have been injured in an accident. Minnesota car insurance law compels drivers to carry $40,000 in personal injury protection coverage for lost wages and medical expenses. Industry analysts acknowledge that the payouts involved result in losses to insurance companies and are behind the continued upward pressure on premiums. Although no-fault has benefits, providing cheap car insurance is not one of them.

Minnesota car insurance rates in 2012 are under pressure also from changing laws which have increased the number of offenses that can cause either higher premiums or cancellations. A higher volume of traffic offenses, such as distracted driving while texting, translates statewide to higher premiums for all.

The economy will also continue to work against lower rates in Minnesota. Insurance companies depend on banks to loan them money to meet their payouts. Since banks are not loaning money, companies increase premiums to ensure they have the funds to cover their costs.

Policy holders wanting to reduce their costs should be sure to ask about discounts, choose higher deductibles and shop around. With the Internet, comparison shopping for quotes has never been easier.

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