Auto insurance policy changes were made as part of the Wisconsin 2009-11 state financial budget (Wisconsin Act 28). While none of the policy changes have anything to do with state finances, each of them were placed into the budget and approved with very little legislative debate.
Wisconsin Act 28, part of the Wisconsin Budget Insurance Statutory Provisions Contained in the 2009-2011 Wisconsin State Budget thus now requires changes to auto insurance policies and in fact makes auto insurance mandatory starting as of June 1, 2010.
Previously, minimum mandated levels for liability insurance for one accident were $25,000 for injury/death of one person, $50,000 for injury/death of two or more persons and $10,000 for property damage, also known as 25/50/10 and was required under the financial responsibility law. Under Act 28, these mandated levels increase to $50,000, $100,000 and $15,000 respectively. These new limits will be known as minimum Liability limits of 50/100 /15 for Wisconsin's mandatory auto insurance.
From January 1, 2010, to December 31, 2016 the mandatory Liability limits for auto insurance will be 50/100/15. After December 31, 2016, the limits shall be the amounts established by the Department of Transportation under newly created Section 344.11 of the Wisconsin Statutes. Beginning then in 2017, these levels will be modified every five years to account for inflation.
The following changes to Wisconsin auto insurance go into effect November 1, 2009:
Previously, the minimum amount of Uninsured Motorist (UM) coverage required under an auto insurance policy was $25,000/person and $50,000/accident (25/50 UM coverage). Act 28 increases this minimum amount to $100,000/person and $300,000/accident (100/300 UM coverage).
Previously, Underinsured Motorist (UIM) coverage was not required but if a consumer chose to purchase this coverage, their coverage requirement was $50,000/person, $100,000/accident). Act 28, however, requires motorist have UIM coverage of $100,000/person and $300,000/accident.
Under new WI law (effective 11/1/09) a consumer may choose not to purchase Medical Payments coverage (it is optional or voluntary coverage). If they do, however, chose to have purchase Med Pay the required minimum amount of coverage is $10,000 per person. Previously, this amount was $1,000 per person.
Stacking of coverages is now allowed. Previously, if a driver was involved in an accident in an insured vehicle, they were not allowed to apply the coverage from other insured vehicles to pay for damages in that accident (also known as stacking). As of November 1, 2009 Wisconsin Statutes now permit stacking for UM and UIM coverage and also allows the stacking of the coverage limits for a maximum of three vehicles. This means insured motorists involved in an accident with a covered vehicle will be allowed to apply uninsured and underinsured coverage from up to three other vehicles to help pay for damages.
Prior to laws going into effect on 11/1/09 an auto insurance policy could contain a "reducing clause" stating that any limits for UM or UIM coverage could be reduced by the amounts paid from other sources, including another driver's liability insurance payments. Act 28, however, bans these clauses.
WI Statutes now prohibit an insurer from placing an individual in a high-risk category on the basis that the individual has not previously had auto insurance (effective 11/1/09).
So to go over the changes with a list of the WI Statue that was amended or added:
- Underinsured motorist coverage, which was optional, is now required for state drivers on new or renewed policies as of November, 1 2009. For people with existing policies the changes will take effect when they renew. Wisconsin Statute 632.32(4) .
- Uninsured/Underinsured Motorist minimum coverage limits are raised up to $100/$300 as of 11/1/09 and each auto whether under separate policies or one policy, must be insured for the minimum UM/UIM limits must have these coverages. Wisconsin Statute 632.32(4).
- Definition of uninsured motor vehicle to include no-contact accidents with independent third party verification; goes into effect 11/1/09. Wisconsin Statute 632.32(2)(g).
- Minimum Medical Payments increases from $1000 to $10,000 per person as of 11/1/09 . Wisconsin Statute 632.32(4).
- Insurers must offer the new Medical Payment (Med Pay) limit of $10,000 to insureds who have previously rejected the coverage or who have Med Pay coverage at less than $10,000. The offer should be at renewal with an explanation of the coverage, the cost, and a reasonable period during which the insured can reject the coverage.
- Uninsured/Underinsured Motorist must be offered on umbrella/excess policies. The insurer must include limits of not less than $100,000/$300,000, unless the insured supplies a written rejection of the coverage. Insurers are not required to offer UM/UIM limits that equal the umbrella/excess policy's liability limits. Wisconsin Statute 632.32(4).
- Motorists will need to have a policy providing at least $50,000 in bodily injury coverage for one person, $100,000 in bodily injury coverage per accident and $15,000 to cover property damage. The current limits are $25,000, $50,000 and $10,000, respectively. The higher limits go into effect Jan. 1, 2010 for those with a SR-22 policy and June 1, 2010 for everyone else. Wisconsin Statute 344.01 (2)
The Wisconsin Commissioner of Insurance notes that all SR-22 policies must have the minimum limits of $50,000/$100,000/$15,000 effective on January 1, 2010. Auto policies not issued to meet Wisconsin's financial responsibility requirements are not required to have the $50,000/$100,000/$15,000 limit until June 1, 2010 (the effective date of compulsory auto). Insurers may though wish to give their insureds the option to increase the limit on those auto policies that are less than the $50,000/$100,000/$15,000 minimum coverage required of all policies on June 1, 2010, and thereafter as of January 1, 2010, so that all policyholders are assured of meeting the financial responsibility requirements if they are in an accident.
Insurers cannot mid-term endorse a policy to include the increased limits, charge a premium and then cancel the policy if the premium is not paid if the increased limit requirement is not yet effective. For example, insurers cannot, by endorsement, effective January 1, 2010, increase the liability limits on all auto policies to $50,000/$100,000/$15,000, charge a premium and then mid-term cancel the policy if the premium is not paid because the law's effective date for all but SR-22 policies is not until June 1, 2010. Insurers may make a mid-term offer to increase the limits, but the insured must accept the offer.
The WI legislature notes what portions of WI Statues were changed by Act 28. This lists a lot of the same information as noted above but in the statute, legal language which is in many places not as clear as the summaries given above.
Under 344.61 mandatory motor vehicle liability insurance, is created with the following provisions by Act 28:
- No person may operate a motor vehicle unless the owner or operator of the vehicle has in effect a motor vehicle liability policy with respect to the vehicle being driven.
- No person may operate a motor vehicle unless the person, while operating the vehicle, has in his or her immediate possession proof of motor vehicle liability insurance.
Chapter 632 (insurance laws) are amended so that the below provisions are effective for policies issued or renewed November 1, 2009:
- Uninsured motorists coverage limits have increased to a minimum of $100,000 per person and $300,000 per accident [s. 632.32 (4) (a) 1].
- The definition of an uninsured motor vehicle has been changed to include an unidentified motor vehicle that does not actually hit another vehicle, provided that an independent third party provides evidence in support of the unidentified motor vehicle's involvement in the accident [s. 632.32 (2) (g) 2].
- Underinsured motorists coverage limits have increased to a minimum of $100,000 per person and $300,000 per accident [s. 632.32 (4) (a) 2m].
- A definition of underinsured motorist coverage has been added. Underinsured motorist coverage means coverage for the protection of persons insured under that coverage who are legally entitled to recover damages for bodily injury, death, sickness, or disease from owners or operators of underinsured motor vehicles [s. 632.32 (d)].
- A definition of underinsured motor vehicle has been added. Underinsured motor vehicle means a motor vehicle to which all of the following apply [s. 632.32 (2) (a)]:
- The motor vehicle is involved in an accident with a person who has underinsured motorist coverage,
- A bodily injury liability insurance policy applies to the motor vehicle at the time of the accident, and
- The limits under the bodily injury liability insurance policy are less than the amount needed to fully compensate the insured for his or her damages.
- Underinsured motorist coverage must be included in a motor vehicle policy and may no longer be rejected by the applicant or insured.
- Medical payments coverage has increased to the amount of at least $10,000 [s. 632.32 (4) (a) 3m]. However, applicants and insureds may still reject medical payments coverage.
- Insurers that provide umbrella or excess liability coverage that insure, with respect to a motor vehicle, against loss resulting from liability imposed by law for bodily injury or death of a person arising out of the ownership, maintenance or use of a motor vehicle must provide written offers of uninsured and underinsured motorist coverage as follows [s. 632.32(4r)]:
- Each application for an umbrella or excess liability policy issued on or after the effective of this requirement shall contain a written offer of uninsured and underinsured.
- For umbrella or excess liability policies that are in effect on the effective date of this requirement, the insurers must, at the time of first renewal, provide a written offer of uninsured motorist coverage to the named insureds under each policy that does not include uninsured motorist coverage and a written offer of underinsured motorist coverage to the named insureds under each policy that does not include underinsured motorist coverage.
- The offers may be rejected by the insureds or applicants. The insurer is not required to make such offers in subsequent renewal notices.
- If an umbrella or excess liability policy in effect on the date of enactment or issued on or after the date of enactment does not provide for either uninsured or underinsured motorist coverage and the insurer failed to provide the written offer for these coverages, then, on the request of the insured, a court shall reform the policy to include these coverages with the same limits as the liability coverage limits under the policy.
- The above requirements do not apply to town mutual insurers.
- A policy may limit the number of motor vehicles to 3 for which the limits for coverage for uninsured and underinsured motorists coverage may be added together [s. 632.32 (6) (d) and (e)].
- A policy may limit the number of motor vehicles to 3 for which the limits for coverage for medical payments coverage may be added together [s. 632.32 (6) (f)].
- A policy may not provide that the limits under the policy for uninsured motorist or underinsured motorist coverage for bodily injury or death resulting from any one accident may be reduced by [s. 632.32 (6) (g)]:
- Amounts paid by or on behalf of any person or organization that may be legally responsible for the bodily injury or death for which the payment is made;
- Amounts paid or payable under any workers' compensation law; and
- Amounts paid or payable under any disability benefits laws.
- An insurer may not place an applicant or insured in a high-risk category on the basis that the applicant or insured has not previously had motor vehicle insurance [s. 632.355].
As you can see there are many changes to the auto insurance laws of Wisconsin through Act 28. The main one for most WI drivers is that Wisconsin auto insurance will be required in the state starting June 1, 2010 except for those that already have to comply with financial responsibility laws (SR-22) who will be required to obtain the higher limits as of January 1, 2010.
While the Wisconsin Department of Transportation appears to still be working out some of the details of how to enforce the new laws however it is known that Wisconsin drivers will be required to carry with them proof that they have auto insurance. If a driver is stopped for a traffic violation, the police officer can ask for proof of insurance. Those who are found to not have car insurance can be fined up to $500.
After June 1, 2010, Wisconsin drivers will be required to have an automobile insurance policy in force or, in limited situations, other security which could be a surety bond, personal funds, or certificate of self-insurance. At that point a Wisconsin automobile insurance policy must provide the following minimum liability coverage:
- $50,000 for injury or death of one person;
- $100,000 for injury or death of two or more people; and
- $15,000 for property damage.
The law also requires Uninsured and Underinsured motorist coverage each with minimum limits of $100,000/$300,000 for bodily injury coverage. As always one may want to protect their assets by purchasing more coverage than what is provided in the minimum policy required in Wisconsin. Higher limits are available for an additional premium.