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Published: May 12, 2009
Author: Timothy Barber
Introduction
In the last election, voters of this state overwhelmingly carried Democratic candidates into office as part of a national movement promising "change" at all levels of government. The Wisconsin 2009-2010 budget is filled with provisions making good on that promise. 2009 AB 75 contains a number of substantial policy changes buried beneath the numbers, including several significant changes to tort and insurance law. These changes include new rules governing comparative negligence, joint and several liability, jury instructions, uninsured motorist (UM) coverage, underinsured (UIM) coverage, stacking, and new mandatory minimum insurance policy limits, among other changes. In a nutshell, the new legislation vitiates most of the so-called "tort-reform" legislation from the mid 1990's and expands the liability of insurance companies and defendants in tort actions.
Changes to Comparative Negligence and Joint and Several Liability
Under current Wis. Stat. § 895.045(1), a plaintiff in a negligence action is allowed to recover so long as any negligence attributed to the plaintiff does not exceed the negligence of any one defendant. The plaintiff's contributory negligence is measured separately against each defendant found causally negligent. The plaintiff's recovery is reduced by the portion of contributory negligence attributed to him. A defendant is jointly and severally liable to the plaintiff only if the defendant’s negligence is 51% or greater. Defendants who act in concert are also jointly and severally liable. Wis. Stat. § 895.045(2). [1]
Section 3271 of the budget bill amends § 895.045 to provide that a plaintiff's contributory negligence does not bar recovery if the plaintiff's negligence is "not greater than the combined negligence of all of the persons against whom recovery is sought." Therefore, under the new proposal, the plaintiff's negligence is no longer compared separately to that of each defendant. Further, the provision governing joint and several liability is amended to provide that "[a]ny person found causally negligent whose percentage of causal negligence is equal to or greater than the negligence of the person recovering shall be jointly and severally liable for the damages allowed." As such, the threshold for liability under the current statute becomes the threshold for joint and several liability under the proposed change. The plaintiff's recovery is still diminished by the plaintiff's percentage of contributory negligence. Finally, the provision governing "concerted action" is deleted.
Jury Enlightenment
Section 3223 of the budget bill amends Wis. Stat. § 805.13(4), governing jury instructions, to require that "[i]n a civil action involving contributory negligence, the court shall explain to the jury the effect on awards and liabilities of the percentage of negligence found by the jury to be attributable to each party."
Increased Mandatory Minimum Insurance Policy Limits
Under Wisconsin's current Financial Responsibility law, Wis. Stat. Ch. 344, an insurance policy constitutes acceptable proof of "financial responsibility" if it contains liability limits of $25,000 per person, $50,000 per occurrence, and $10,000 in property damage coverage. Sections 2963 through 2965 of the budget bill amend § 344.01(2)(d), § 344.15(1), and § 344.33(2) to raise the limits of an acceptable insurance policy to $100,000 per person, $300,000 per occurrence, and $25,000 for property damage.
In addition, sections 3158 and 3159 of the budget bill amend Wis. Stat. § 632.32(4)(a)1. to raise the minimum required level of UM coverage from $25,000 per person to $100,000 person and from $50,000 per occurrence to $300,000 per occurrence. Section 3164 of the budget repeals and renumbers Wis. Stat. § 632.32(4)(b) and creates a new provision, Wis. Stat. § 632.32(4)(a)3m., raising the level of required medical payments coverage from $1,000 to $10,000.
Mandatory UIM Coverage
Currently, Wis. Stat. § 632.32(4m) requires every insurer writing policies in this state to provide written notice of the availability of UIM coverage. The term "underinsured motor vehicle" is not defined in the statute, and courts have allowed insurers to define the coverage either in terms of the difference between an insured's damages and the tortfeasor's liability limits or the difference between an insured's UIM limits and the tortfeasor's liability limits. [2] Most UIM policies currently employ the second definition, such that an insured purchases a fixed, pre-determined level of coverage and is entitled to the limits of his UIM coverage reduced by the amount of payments received by the tortfeasor.
Section 3166 of the budget bill deletes § 632.32(4m) in its entirety. Section 3152 of the budget bill creates a new section, Wis. Stat. § 632.32(2)(d), that rejects the "limits-to-limits" definition of UIM coverage. Instead, the new section specifically defines "underinsured motor vehicle" as a vehicle involved in an accident with someone with UIM coverage where "[t]he limits under the bodily injury liability policy are less than the amount fully needed to fully compensate the insured for his or her damages."
Importantly, section 3161 of the budget bill creates Wis. Stat. § 632.32(4)(a)2m., which now requires every policy of insurance issued in Wisconsin to contain UIM coverage with limits of $100,000 per person and $300,000 per occurrence. [3]
"Hit-and-Run" Now Includes "Miss-and-Run"
The new budget bill changes the definition of "uninsured motor vehicle" to include an unidentified vehicle involved in an accident that does not make contact with the insured's vehicle. Wisconsin Stat. § 632.32(4)(a)2.b. currently defines "uninsured motor vehicle" to include "[a]n unidentified motor vehicle involved in a hit and run accident." The Wisconsin Supreme Court has consistently interpreted this provision as requiring an actual "hit"—that is, physical contact, between the insured's vehicle and another vehicle. [4] Section 3154 of the budget creates a new section, § 632.32(2)(f)2., eliminating the physical contact requirement. The new provision defines "uninsured motor vehicle" to include simply "[a]n unidentified motor vehicle."
Prohibited Provisions: Stacking and Reducing Clauses
Some of the most significant changes to insurance law in 2009 AB 75 appear in sections 3168-72. These provisions amend Wis. Stat. § 632.32(5) to prohibit a number of provisions in insurance policies that the current statute expressly allows. Under the proposed change, no policy of automobile insurance may:
- Prohibit stacking of insurance coverage limits for a single person injured in any one accident regardless of the number of policies, persons, vehicles, or claims made;
- Limit UM/UIM coverage to persons not using a motor vehicle (e.g., a pedestrian) to any single limit of UM/UIM coverage for any vehicle with respect to which the person is insured;
- Limit medical payment coverage to persons not using a motor vehicle to any single limit of medical payments coverage for any vehicle with respect to which the person is insured;
- Reduce UM/UIM coverage by amounts paid by: 1) any person legally responsible for the bodily injury or death, 2) amounts paid under worker’s compensation law, and 3) amounts paid under any disability law; or
- Deny coverage for a loss resulting from the use of a motor vehicle that is owned by a named insured or family member and that is not described in the policy and not covered as a newly acquired vehicle.
Required Umbrella and Excess Liability Provisions
Section 3167 of the budget bill creates Wis. Stat. § 632.32(4r), and requires any insurer that writes excess liability or umbrella policies to provide written offers of UM and UIM coverage at the time an insured applies for the policy. Applicants may reject either coverage, but must do so in writing. If coverage is rejected, an insurer need not offer it when the policy renews. Notably, new § 632.32(4r)(d) provides that if an umbrella or excess liability policy does not contain UM or UIM coverage and the insurer did not provide a written offer of such coverages, a court may, upon the request of the insured, reform the policy to provide such coverage with the same limits as the underlying liability limits in the policy.
Conclusion
As is evident, the 2009-10 budget contains a number of provisions that dramatically alter insurance law and the current tort-law framework in Wisconsin. These changes will make it easier for plaintiffs to recover in negligence actions and hold an individual defendant responsible for all of their damages. Additionally, the higher mandatory minimum insurance coverages, mandatory UM/UIM, and the prohibition on anti-stacking and reducing clauses will substantially increase the risk exposure of insurance companies that write automobile coverage policies.
Timothy M. Barber is an attorney with Axley Brynelson, LLP, focusing on appellate practice, commercial litigation and personal injury law. For more information, contact Mr. Barber at 608.283.6740 or tbarber@axley.com.
[1] But see Richards v. Badger Mut. Ins. Co., 2008 WI 52, 309 Wis. 2d 541, 749 N.W.2d 581 (ruling that Wis. Stat. § 895.045(2) does not govern the apportionment of damages among joint tortfeasors but creates a separate cause of action codifying the common-law "concerted action" theory of liability). Thus, the effect of the deletion of Wis. Stat. § 895.045(2) is unclear.
[2] See, e.g., State Farm Mut. Auto. Ins. Co. v. Langridge, 2004 WI 113, 275 Wis. 2d 35, 683 N.W.2d 75.
[3] Due to a drafting error, both Section 3159 and Section 3161 of the budget bill refer to mandatory "uninsured motorist coverage"; however, the change in section heading, as well as the LRB analysis, confirms that the latter provision was intended to create mandatory "underinsured motorist coverage."
[4] See, e.g., DeHart v. Wisconsin Mut. Ins. Co., 2007 WI 91, ¶ 32, 302 Wis. 2d 564, 734 N.W.2d 394
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