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Politics and Automobile Insurance CoverageView PDF

Effective November 1, 2011 the new law will go into effect that will reduce the minimum amounts of liability coverage, the minimum amount of property damage coverage and the minimum amount of medical payments coverage. The law also allows insurance companies to reduce Uninsured Motorist (UM) and Under Insured Motorist (UIM) coverage. They also have a choice as to whether or not they even provide UIM coverage. You may not be aware of the potential weakening of your insurance policy and as a result, may suffer financially if you are seriously injured in an automobile accident or if you seriously injure someone else in an automobile accident.

A Perfect Example - Kris Kringle was severely injured in an accident during the summer of 2010. His medical expenses were in excess of $1,000,000. The “at fault” driver who hit Kringle had a $250,000 liability insurance policy. Kringle had purchased UIM coverage of $300,000 for each of his two vehicles. Under the law established in 2009, Kringle could receive the “at fault” driver’s $250,000 and both of his $300,000 underinsured motorist policies for a total of $850,000. He would able to pay his bills and save his home.

The 2011 law allows insurance companies to add “anti-stacking clauses” and “reducing clauses” to policies that could limit an insured person’s monetary recovery. Example: In Kringle’s situation one of his UIM policies ($300,000) could be eliminated by an “anti-stacking clause” and one of his UIM policies ($300,000) could be reduced to $50,000 by the subtracting the other driver’s liability policy ($250,000). Kringle’s total recovery would be only $300,000 ($250,000 other drivers liability + $50,000 of his UIM) as opposed to recovery of $850,000 ($250,000 liability + $300,000 UIM + $300,000 UIM.) The detailed chart below shows that most of the positive changes to our automobile insurance laws that were in effect for policies issued after November 1, 2009 will now be reverted back to the types of policies and policy language that were in effect in 2005. The next chart shows the comparison of the 2005 law, the 2009 law and the 2011 law. Please note that the 2009 law required that automobile insurance in Wisconsin is mandatory. The 2011 law did not change that requirement.

Comparison of Minimum Insurance Coverages
Under the 1995, 2009 and 2011 Law Changes
Type of Insurance 1995 Law 2009 Law (effective 11/1/09) 2011 Law (effective 11/1/11)
Liability $25,000 per person or $50,000 per occurrence $50,000 per accident or $100,000 per occurrence $25,000 per person or $50,000 per occurrence
Property $10,000 $15,000 $10,000
UM $25,000 per person or $50,000 per occurrence $100,000 per person or $300,000 per occurrence $25,000 per person or $50,000 per occurrence
UIM $50,000 per person or $100,000 per occurrence (not required) $100,000 per person or $300,000 per occurrence (required) $50,000 per person or $100,000 per occurrence (not required)
Medical Payments (optional coverage) $1,000 $10,000 $1,000
Reducing Clauses
Issue 1995 Law 2009 Law (effective 11/1/09) 2011 Law (effective 11/1/11)
Reducing Companies were allowed to reduce UM/UIM coverage by amounts paid by the person or organization legally responsible, paid or payable under worker’s compensation law, or paid or payable under disability benefits law. If consumer purchased $100,000 in UIM coverage and the other driver carried $50,000 in liability coverage, insurers could deduct the $50,000 in coverage, leaving the consumer with only $50,000 in UIM coverage. Companies are not allowed to include reducing clauses in their policies. If consumers purchase $100,000 in UM/UIM coverage, that is the amount of coverage they are entitled to receive if the injuries sustained require that amount of coverage. Companies are allowed to reduce UM/UIM coverage by amounts paid by the person or organization legally responsible, paid or payable under worker’s compensation law, or paid or payable under disability benefits law. If consumer purchased $100,000 in UIM coverage and the other driver carried $50,000 in liability coverage, insurers can deduct the $50,000 in coverage, leaving the consumer with only $50,000 in UIM coverage.
Stacking
Issue 1995 Law 2009 Law (effective 11/1/09) 2011 Law (effective 11/1/11)
Stacking Companies were allowed to include language in their policies prohibiting consumers covered under more than one auto insurance policy from stacking coverage from multiple UM/UIM or medical-payments policies to pay for damages suffered in an accident. Companies are not allowed to include anti-stacking provisions in their policies. Consumers are able to stack the additional coverage from up to three UM/UIM or medical-payments policies to pay for damages suffered in an accident. Companies are allowed to include language in their policies prohibiting consumers covered under more than one auto insurance policy from stacking coverage from multiple UM/UIM or medical-payments policies to pay for damages suffered in an accident.
Definition of UIM Coverage
Issue 1995 Law 2009 Law (effective 11/1/09) 2011 Law (effective 11/1/11)
Definition of UIM Coverage Each company was allowed to create its own definition of what is considered an underinsured vehicle. Most companies adopted a definition of comparing the negligent driver’s liability coverage with the UIM coverage of the policyholder. If the negligent driver had $100,000 in liability coverage and the policyholder had $100,000 in UIM coverage, there was no UIM coverage. There is a new common definition that requires all companies to define UIM coverage by comparing the negligent driver’s liability limit with the amount of damages actually sustained by the policyholder. Each company is allowed to create its own definition of what is considered an underinsured vehicle. Most companies adopted a definition of comparing the negligent driver’s liability coverage with the UIM coverage of the policyholder. If the negligent driver has $100,000 in liability coverage and the policyholder had $100,000 in UIM coverage, there is no UIM coverage.
Hit-and-Run Coverage
Issue 1995 Law 2009 Law (effective 11/1/09) 2011 Law (effective 11/1/11)
Hit-and-Run Coverage Previous law required that a vehicle be “hit” to qualify for hit-and-run coverage under a UM insurance policy. If someone was involved in an accident caused by an unidentified vehicle but there was no physical contact, the insurance company could deny coverage even if there were witnesses to the accident. UM coverage will apply if evidence can be shown by an independent party that an unidentified vehicle caused the accident, even if there was no physical contact. An injured party must prove that the unidentified vehicle caused the accident. E2011 law defines a phantom vehicle as a motor vehicle involved in an accident with a person who has UM coverage, if the motor vehicle makes no physical contact with the insured or with the vehicle the insured is occupying and the identity of neither the operator nor the owner of the motor vehicle is known. To recover compensation under the UM coverage, the facts of the accident must be corroborated by competent evidence by someone other than the person making the claim under the UM coverage. There is also a reporting requirement of 72 hours to any police officer or WI Dept. of Transportation and a 30 day reporting requirement that the insured file a statement under oath that they have a cause of action arising out the accident for damages against a person whose identity is not ascertainable in setting forth the facts in support of the statement.
Umbrella Policies and UM/UIM Coverage
Issue 1995 Law 2009 Law (effective 11/1/09) 2011 Law (effective 11/1/11)
Umbrella Policies and UM/UIM Coverage Companies were obligated to offer UM/UIM policies when umbrella policies were written but were not required to document the consumers’ response to the offer. The penalty for failing to offer the coverage was the minimum coverage provided by law. Companies must still offer UM/UIM coverage as part of umbrella policies, but consumers refusing the coverage must do so in writing. The penalty for failing to offer the coverage is the same limit as the liability coverage in the umbrella policy. Companies are obligated to offer UM/UIM policies when umbrella policies are written but are not required to document the consumers’ response to the offer. The penalty for failing to offer the coverage is the minimum coverage provided by law.

What You Should Do – If you drive an automobile you are at risk of serious injury as a result of an automobile accident. You should maintain adequate automobile liability insurance so that you can properly protect your assets and compensate the person that was injured. You should maintain adequate UM and UIM coverage to protect yourself if you are injured in a serious accident. And, REMEMBER under the new law if you purchased $100,000.00 of UIM coverage you will NEVER receive that total coverage as it will be REDUCED by other payments! You should maintain adequate Medical Payments coverage to protect yourself if you are injured in a serious accident. Insurance companies now have the ability to re-write policies back to the provisions that were allowed in the 1995 law that were inadequate in most situations. Along with allowing reducing clauses, the new law allows for reducing liability limits down to $25,000.00 per person, $50,000 per occurrence. The 2009 law required limits of $100,000 per person, $300,000 per occurrence. Medical payments coverage limits have been reduced from $10,000.00 to $1,000.00.

With the new low levels of liability coverage now allowed in Wisconsin, there is a much higher risk you will be involved with a driver who may not have adequate insurance. Allowing lower liability limits transfers the burden to safe drivers by requiring that they have higher underinsured coverage. We anticipate that underinsured claims will increase 60% or more due to the change in the law allowing for lower liability limits. We recommend that our clients take immediate action and increase their underinsured coverage to at least $250,000 per person and $500,000 per occurrence. At an added cost of about $10.00 per year we are urging our clients to contact their insurance agent and request UNDERINSURED COVERAGE with limits of at least $250,000/$500,000. You may also want to inquire about UMBRELLA COVERAGE. If your policy is about to expire, you should make sure that you review your coverages and make sure that they are adequate for your situation. You may no longer have the coverages that you thought you had based on the changes of the limits of insurance and the new definitions in your insurance policy. Most clients do not discuss their automobile insurance with their lawyer until after an accident and by then it is typically too late. Please make sure that you discuss your insurance policy with your insurance agent so that you thoroughly understand what you are purchasing and that you and your assets will be protected.

Do you have questions about the coverage in your auto policy? Have you been injured due to someone failing to use reasonable care? Contact Stellpflug Law at 920.336.5766 and ask for Attorney Tim Hawley or Attorney Bob Janssen. They can provide you with the knowledge and expertise to support your claim.

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