On Tuesday, April 12, Governor Walker signed legislation that got rid of earlier increases in mandatory auto insurance coverage.
This bill, dubbed “Truth in Automobile Insurance,” which sounds dry compared to the controversy in Wisconsin over the past few months, could have huge impacts on drivers and families who are involved in car accidents. The current law requires liability coverage of $50,000 for the injury or wrongful death of a person; $100,000 for more than one person and $15,000 for property damage. The law signed Tuesday would drop those limits to $25,000 for the injury or death of a person, $50,000 for the injury or death of more than one person, and $10,000 for property. This new law has wide-ranging consequences. The one that Governor Walker has relied upon is the possibility of buying lower-cost car insurance with less coverage, which he calls “empowering consumers.” Governor Walker didn’t mention that insurance premiums had already been falling in the state. Wisconsin already has among the lowest car insurance premiums in the county. Insufficient coverage, however, puts the same people Governor Walker claims to be helping in danger of being exposed to large judgments from injured people. In buying car insurance, it is important to remember that once your insurer has paid the maximum amount under the policy, a liable party can be responsible for the balance of a judgment. Given the cost of healthcare today, that can be an intimidating amount. The new law will hurt injured parties as well as insured. Less money may be available to compensate you for an injury caused by drivers. This change emphasizes the importance of maintaining uninsured/underinsured motorist coverage to protect you and your family in case of an unfortunate accident. As the Wisconsin Association of Justice noted, however, “The new law will once again allow insurance companies to define underinsured motorist coverage in a way that may prevent the coverage from applying and allowing the insurers to again reduce such coverage by the amount of liability insurance carried by the negligent driver.”
For more information on this new law:
Legislative History: http://legis.wisconsin.gov/2011/data/AB4hst.html
Milwaukee Journal-Sentinel: http://www.jsonline.com/news/statepolitics/119695019.html