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Wisconsin Auto Liability Minimums Double

As the calendar turned and 2009 rolled into 2010, changes brought about as a result of new auto insurance legislation in Wisconsin went into effect, increasing auto liability minimums for state drivers. The new laws, rolled into the state's budget package voted on and passed last fall, double the minimum levels of liability coverage Wisconsin drivers can carry. They also created other changes in law, including punitive consequences for drivers who do not follow the new rules. The Democrat-led state legislature and Democratic Governor Jim Doyle were in lockstep on the measure, which even now is the topic of grumbling from state Republicans.

Overview of New Wisconsin Laws

One particularly significant consequence of the new Wisconsin auto insurance legislation is its requirement of auto insurance for all drivers across the state (and its related implementation of punitive standards to scaffold enforcement of the laws). Previous to the legislative package, Wisconsin drivers were not legally bound to carry auto liability insurance at all. Now that the new laws are in effect, Wisconsin becomes the 49th state plus the District of Columbia to require some sort of mandated auto coverage. Only New Hampshire remains without any such law on its books.

Although Wisconsin as a state did not require drivers to carry auto liability coverage prior to these laws being passed, it did have specific minimum guidelines for drivers who did choose to carry auto coverage. The minimum limits for auto liability before the new year passed were 25/50/10. Under the new law, they have been increased to 50/100/15. The three numbers represent (in thousands of dollars) the minimum state-mandated levels of coverage each driver must carry on each of the three parts of a Wisconsin auto liability policy. With the implementation of the increased numbers, Wisconsin drivers can expect to pay significantly more for their auto liability coverage.

The first number represents the individual bodily injury liability coverage portion of a Wisconsin insurance policy. The minimum coverage for this part is now $50,000 for all Wisconsin policy holders. The second portion of coverage is also set aside for bodily injury, but this time a per-accident limit. With the new law, that minimum limit has been increased to $100,000 per accident. The third and final portion of every Wisconsin auto liability policy deals with property damage liability. Now that the new laws have gone into effect, the state minimum for that type of coverage stands at $15,000. Auto liability insurance policies only pay out for losses to the other driver, passengers, and vehicle; they contain no provisions for coverage to the at-fault driver or the covered vehicle.

Provisions in new Wisconsin Law

Aside from the new auto liability minimums and the change in law making auto liability insurance mandatory across the state, there are also other changes significant enough to mention that have also come about as a result of this legislation. One of these changes deals with the treatment of so-called anti-stacking provisions. In the state of Wisconsin, insurers have had the right (and have frequently exercised this right) to include anti-stacking provisions in the language of the policies they have written for state auto insurance consumers. One specific change in the new law is in its dealing with these provisions. State insurance law now allows the stacking of auto insurance policies.

Stacking in this sense is the practice of taking unused coverage from a vehicle not involved in an accident and applying them to a vehicle involved in an accident, essentially "stacking" the two policies together. For example, a driver with two $500,000 liability policies can have effectively $1,000,000 worth of coverage on each of two cars as needed. The anti-stacking provisions were understandable from a business standpoint, since customers were basically getting twice the coverage they were paying for. But from the perspective of the consumer, being allowed to stack policies when you need the extra coverage is justified, because you have been paying for both policies all along. This particular provision continues to be a source of debate and criticism.

The other major noteworthy change was in the punitive consequences written into the legislation. This portion of the law will not go into effect until June of 2010. So although the new requirements for insurance coverage are already in effect, there is a limited window of opportunity for consumers to get up to speed with their coverage without fear of punishment.

There are several punitive aspects of the new law, all of them financial in nature, dealing with issues of non-compliance. As of June 1, 2010, drivers in Wisconsin will be required to furnish proof of auto insurance to law enforcement officials when asked to do so. Failure to provide proof of insurance will bring a $10 fine. Failure on the part of the driver to have any kind of insurance at all will result in a fine of $500. Providing an officer with fraudulent proof of Wisconsin auto liability insurance will result in a fine of up to $5,000. Clearly, the emphasis from a punitive standpoint is in getting Wisconsin drivers to comply with the new laws. Some of the fines represent more money than many drivers would have to spend to get a liability policy.

Some Still Opposed to Law

The new Wisconsin auto insurance law had its critics while it was going through the legislative process, and it continues to have its critics even after its passage and implementation. Some have argued that Democrats buried the legislation within the state budget bill to minimize chance of debate or Republican filibuster and thus ensure its passage. Others are more concerned about the usefulness of the bill, with many claiming it is not needed and poses unnecessary additional costs for Wisconsin drivers, many of whom are already struggling financially. In particular opposition to the package is the Insurance Research Council (IRC). The IRC has come out publicly in opposition to the new law, both before and since its passage.

For the IRC, the new law is not necessary because it raises minimum levels of coverage when, according to the group, the old minimums were sufficient. According to IRC research, 96 percent of all bodily injury claims were $15,300 or under, a figure well below Wisconsin's old $25,000 limit. This is just one example of a group united in opposition to the measure. Republicans at the time of its passage seemed determined to work to have the law repealed, although little has been accomplished on that front in intervening months. As the minority party in the state legislature, the Republican Party is truly limited in what it can accomplish to overturn something like this that has already been placed on the books.

In the past few months, the first groups of Wisconsin drivers have seen their policies roll over, reflecting new state-mandated minimums for coverage. As more time passes and the application of the new rules go into full effect, it will be interesting to find out just how much the state auto industry is forced to adjust its rates in response to these new rules. Much more will be known as the year progresses.

[1] Retrieved 2010-01-10.
[2] Retrieved 2010-01-10.



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