Minnesota no-fault (PIP): what it pays regardless of who caused the crash

Basic economic loss benefits are two separate buckets, not one. This is what each one covers, whose policy pays, when the payment is late, and what the insurer owes you when it is.

Minnesota’s No-Fault Act does something narrow and useful: it detaches a first layer of money from the question of who caused the crash. Nobody has to be blamed, nothing has to be proven, and no lawsuit has to exist. What that layer covers is defined precisely by statute, and the definitions are more specific than the marketing name “personal injury protection” suggests.

Two buckets, not one

Section 65B.44, subd. 1(a) sets the floor:

Basic economic loss benefits shall provide reimbursement for all loss suffered through injury arising out of the maintenance or use of a motor vehicle, subject to any applicable deductibles, exclusions, disqualifications, and other conditions, and shall provide a minimum of $40,000 for loss arising out of the injury of any one person, consisting of:

(1) $20,000 for medical expense loss arising out of injury to any one person; and

(2) a total of $20,000 for income loss, replacement services loss, funeral expense loss, survivor's economic loss, and survivor's replacement services loss arising out of the injury to any one person.

Paragraph (b) of the same subdivision forecloses a category of policy drafting: a person entitled to basic economic loss benefits “is entitled to the full medical expense benefits set forth in subdivision 2, and may not receive medical expense benefits that are in any way less than those provided for in subdivision 2, or that involve any preestablished limitations on the benefits.” Paragraph (c) bars a reparation obligor or health plan company from contracting to provide “managed care services” to no-fault claimants, defining that term as any program of medical services using providers managed, owned, employed by, or under contract with a health plan company.

What the medical bucket covers

Subdivision 2(a) requires reimbursement of all reasonable expenses for necessary medical, surgical, x-ray, optical, dental, chiropractic, and rehabilitative services including prosthetic devices; prescription drugs, subject to detailed pricing rules keyed to average wholesale price; ambulance and other transportation expenses incurred traveling to receive covered benefits; sign interpreting and language translation services related to receiving care, other than services provided by a family member; and hospital, extended care, and nursing services. Paragraph (b) permits hospital room and board benefits to be limited, except for intensive care, to the institution’s customary semiprivate rate. Paragraph (d) preserves medical expenses accrued before death even where benefits are paid to survivors.

What the second bucket covers

Income loss. Eighty-five percent of gross income loss from inability to work, capped at $500 per week, under subdivision 3(a). Subdivision 3(c) reduces compensation by income from substitute work actually performed, and by income the injured person would have earned in available appropriate substitute work they were capable of performing but unreasonably failed to undertake. Subdivision 3(b) covers a person who was unemployed and drawing or eligible for unemployment benefits and loses that eligibility because the injury prevents work, at the same weekly cap.

Replacement services. Subdivision 5 reimburses expenses reasonably incurred in obtaining substitute services the injured person would have performed “not for income but for direct personal benefit or for the benefit of the injured person’s household.” Where the injured person’s full-time responsibility is care and maintenance of a home, the benefit is the reasonable value of that care or the reasonable expense of substituting for it, whichever is greater. The cap is $200 per week, and the statute excludes all replacement services loss sustained on the date of injury and the first seven days after it.

Funeral and burial. Subdivision 4: reasonable expenses not in excess of $5,000, including cremation or delivery under the Darlene Luther Revised Uniform Anatomical Gift Act.

Survivors’ economic loss. Subdivision 6 applies where death occurs within one year of the accident from injuries received in it, is capped at $500 per week, and covers the loss of contributions of money or tangible things of economic value the dependents would have received for their support. The subdivision presumes dependency for a spouse living with the decedent, a child under 18 or older but incapacitated from earning who lived with or was regularly supported by the decedent, and an actual dependent living with the decedent at death. Subdivision 7 covers survivors’ replacement services loss at $200 per week.

Subdivision 8 states what is not there at all: basic economic loss benefits “do not include benefits for physical damage done to property including motor vehicles and their contents.”

Whose policy pays

The intuitive answer — the insurer of whoever was driving — is frequently the wrong one. Section 65B.46, subd. 1 creates the right broadly: if the accident causing injury occurs in Minnesota, “every person suffering loss from injury arising out of maintenance or use of a motor vehicle or as a result of being struck as a pedestrian by a motorcycle has a right to basic economic loss benefits.” Section 65B.47 then assigns which security pays, and subdivision 4 governs the ordinary case:

(a) The security for payment of basic economic loss benefits applicable to injury to an insured is the security under which the injured person is an insured.

(b) The security for payment of basic economic loss benefits applicable to injury to the driver or other occupant of an involved motor vehicle who is not an insured is the security covering that vehicle.

(c) The security for payment of basic economic loss benefits applicable to injury to a person not otherwise covered who is not the driver or other occupant of an involved motor vehicle is the security covering any involved motor vehicle. An unoccupied parked vehicle is not an involved motor vehicle unless it was parked so as to cause unreasonable risk of injury.

Subdivisions 1 through 3 displace that ordering for vehicles used in the business of transporting persons or property, for employer-furnished vehicles, and for people injured by those vehicles, with a list of exemptions in subdivision 1a covering commuter vans, day-care transport, school transport, buses as to Minnesota-resident insureds, and taxi passengers.

Two further mechanics. Section 65B.47, subd. 5 provides that where two or more obligations apply, “benefits are payable only once” and the obligor against whom the claim is asserted must process and pay it “as if wholly responsible,” with a contribution right afterward — so a priority dispute between insurers is not a reason for the claimant to wait. And subdivision 7 forecloses an assumption people make about owning several cars: the limits for two or more vehicles “may not be added together to determine the limit of insurance coverage available to an injured person for any one accident” unless the policyholder makes a specific election, which the insurer must tell policyholders they may make.

Where no-fault sits relative to everything else

Section 65B.61, subd. 1: basic economic loss benefits “shall be primary with respect to benefits, except for those paid or payable under a workers’ compensation law, which any person receives or is entitled to receive from any other source as a result of injury arising out of the maintenance or use of a motor vehicle.” Workers’ compensation outranks no-fault; no-fault outranks health coverage. Subdivisions 2 and 2a coordinate the wage and survivor benefits so that the reparation obligor pays only the amount by which the weekly no-fault figure exceeds the weekly workers’ compensation figure.

Subdivision 3 permits other entities to coordinate their benefits with basic economic loss benefits, but only if they provide an appropriately reduced premium rate calculated on sound actuarial principles.

Uninsured and underinsured motorist coverage sits above all of this and is mandatory. Section 65B.49, subd. 3a(1) requires separate uninsured and underinsured motorist coverages with minimum limits of $25,000 for injury to or death of one person in any accident and $50,000 for two or more. Clause (4) closes an overlap that people expect to be able to exploit: “No recovery shall be permitted under the uninsured and underinsured motorist coverages of this section for basic economic loss benefits paid or payable, or which would be payable but for any applicable deductible.” Clause (6) bars adding UM and UIM limits across two or more vehicles. For context on the layer below, subdivision 3(1) sets the minimum residual liability limits every plan must carry: $30,000 for bodily injury to one person in one accident, $60,000 subject to that per-person limit for two or more persons, and $10,000 for property damage.

The insurer’s clock, and the interest that runs on it

Section 65B.54, subd. 1 sets the timing rule and states its own theory of accrual:

Basic economic loss benefits are payable monthly as loss accrues. Loss accrues not when injury occurs, but as income loss, replacement services loss, survivor's economic loss, survivor's replacement services loss, or medical or funeral expense is incurred. Benefits are overdue if not paid within 30 days after the reparation obligor receives reasonable proof of the fact and amount of loss realized, unless the reparation obligor elects to accumulate claims for periods not exceeding 31 days and pays them within 15 days after the period of accumulation. If reasonable proof is supplied as to only part of a claim, and the part totals $100 or more, the part is overdue if not paid within the time provided by this section.

Subdivision 2 attaches the consequence: “Overdue payments shall bear simple interest at the rate of 15 percent per annum.” Subdivision 3 requires the claim to be paid without deduction for benefits subject to § 65B.61 coordination if those benefits have not actually been paid by the time the claim is due, leaving the obligor to seek reimbursement afterward. Subdivision 5 requires that a rejection be given promptly and in writing, “specifying the reason,” and that where the rejection rests on something other than ineligibility, the notice tell the claimant they may file with the assigned claims bureau and give its name and address.

What the claimant owes in return

Section 65B.56, subd. 1 requires a person claiming benefits to submit, on the obligor’s request, to a physical examination by a physician the obligor selects, “as may reasonably be required.” The costs are borne entirely by the requesting obligor. The examination must be conducted within the city, town, or statutory city where the injured person lives, or at the closest available place if no qualified physician practices there. On request by the person examined, the party ordering the examination must deliver a copy of every written report of the examination, at least one of which must set out the findings and conclusions in detail. The same subdivision requires the injured person to do all things reasonably necessary to let the obligor obtain medical reports and other needed information, and makes noncooperation admissible in a later suit or arbitration.

Section 72A.201, subd. 6(12) backs that up from the other direction: it is an unfair settlement practice for an insurer choosing to have an insured examined under § 65B.56, subd. 1 to fail to notify the insured of all of the insured’s rights and obligations under that statute, including the right to request in writing and receive a copy of the report.

Arbitration is mandatory below a line, and the line has a cost

Section 65B.525, subd. 1 directs the courts to provide

for the mandatory submission to binding arbitration of all cases at issue where the claim at the commencement of arbitration is in an amount of $10,000 or less against any insured's reparation obligor for no-fault benefits or comprehensive or collision damage coverage.

That is generally faster and cheaper than litigation. It also has a consequence written into a different chapter, and it is the kind of interaction that only shows up when the two statutes are read together. Minnesota’s insurance bad-faith remedy, § 604.18, permits a court to give an insured taxable costs on a showing under subdivision 2 of the absence of a reasonable basis for denying policy benefits and the insurer’s knowledge of or reckless disregard for that absence. Subdivision 3(a) fixes the amount: one-half of the excess of the proceeds over the insurer’s offer made at least ten days before trial, capped at a figure of $250,000, plus separately accounted attorney fees, themselves capped at $100,000. Subdivision 4(c) then provides: “An award of taxable costs under this section is not available in any claim that is resolved or confirmed by arbitration or appraisal.” Subdivision 4(d)(1) separately makes findings from a § 65B.525 arbitration inadmissible in a proceeding seeking those costs.

What this page is not

It sets out what the No-Fault Act provides and how the pieces are sequenced. It does not tell any reader which coverage applies to their crash, what their policy says, or whether a particular denial was proper — all of which depend on documents and facts outside this page.