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Consumers win big in budget’s changes on auto insurance

The state budget gave Wisconsin’s automobile insurance rules a much needed tune-up so they’ll work better for consumers and ensure everyone gets what they pay for when buying policies.

The changes fall into three categories; who must have insurance, how much insurance should people carry and changes that ensure claims are paid when most needed.

Beginning in July 2010, Wisconsin will join 48 other states in requiring all drivers to carry insurance. Current estimates are that 15 percent of drivers carry no insurance. In 2006, uninsured drivers were involved in 8,000 accidents. These accidents caused 78 deaths and over $35 million in unpaid medical bills. Public support for mandatory auto insurance is strong and comes as no surprise as Wisconsin residents are strong believers in personal responsibility.

Of course, insurance is only as good as the insurance you carry. No one would believe carrying $100 of insurance would be sufficient to cover anything, and Wisconsin has required a minimum level for many years. While this strategy is sound, it only makes sense if minimum levels are relevant to today’s medical and property costs.

The state budget wisely provides the first increase in minimums since 1982. Beginning in 2010, the minimum level of liability insurance will increase to $50,000 (for injuries to a person), $100,000 (all injuries in an accident) and $15,000 (property damage). According to insurance industry sources, 80 percent of insured drivers already carry at least these amounts, so this change will affect relatively few people. In fact, most agents have been recommending much higher coverage for years.

In addition, coverage for uninsured and underinsured motorists will also be mandatory at the $100,000 per-person/$300,000 per-accident level. Uninsured motorist coverage protects you if you’re in an accident with an uninsured driver, and underinsured coverage protects you if you’re in an accident with someone who doesn’t have enough insurance to cover your injuries. Both coverages are personal and portable and cover you whether you’re injured as a pedestrian, on a bike or in your car.

Finally, you must be sure that if you’re involved in an accident that you’ll have access to the coverage you pay for. A number of provisions in the state budget undo some exclusions that the insurance industry helped put in place in 1995 that allowed them to deny more claims without reducing your premiums. That meant less coverage for you and more profits for them.

Confusing issues like reducing clauses, anti-stacking and a lack of standard definitions too often meant consumers were unable to collect on policies they had paid for when they needed it most. The budget returns common sense to the law and is a giant win for consumers.

Now some companies might attempt to use these law changes to try to justify rate increases. My advice is that if your rates go up, don’t simply blame politicians, use your common sense—shop around. With over 150 insurance companies offering automobile insurance in Wisconsin, I’m sure you’ll find a better choice.

Mark L. Thomsen is the president of the Wisconsin Association for Justice, the state’s largest voluntary bar organization defending the civil justice system; 44 E. Mifflin St., Suite 402, Madison, WI 53703; phone (608) 257-5741; e-mail info@wisjustice.org.