Changes to Wisconsin Auto Insurance

This summary was originally presented by Wisconsin Association for Justice (WAJ) President Mark L. Thomsen at WAJ’s 2009 Summer Seminar.

Wisconsin legislature recently enacted the below changes to auto insurance. We follow these changes in the law closely because they affect our clients. If you carry auto insurance, please be aware of these changes in order to ensure that you have the right auto insurance coverage.

1. Increase Minimum Automobile Liability Coverage: Beginning January 2010 the minimum liability limits will be $50,000/$100,000/$15,000. These rates will be subject to a CPI review every five years beginning in 2017. The governor did veto the liability rate increases that were to be phased in years two and three.
2. UIM will be a required mandatory coverage. Right now insurers must offer UIM coverage to people purchasing automobile insurance. This mandates people purchase UIM coverage when they buy automobile insurance.
3. Increase in UM/UIM minimum coverage to $100,000/$300,000 per policy.
4. Defines UM coverage by comparing the negligent driver’s liability insurance limit with the amount of damages (or injuries) actually sustained by the policyholder. Today there is no common definition of UIM coverage and each insurance company has their own definition. A lack of common definition of UIM has resulted in over 30 appellate cases that have sought to determine whether the UM/UIM reducing clause is ambiguous.
5. Elimination of reducing clauses: Insurance companies will no longer be able to deduct the amount of insurance carried by a negligent driver from the uninsured/underinsured coverage purchased by the injured policyholder. This change will make sure injured drivers/passengers can access the full amount of insurance they have paid for when they need it.
6. Prohibits anti-stacking provisions in automobile policies for UM/UIM coverage, except the policy may limit the number of vehicles covered up to three. In 1995, the legislature limited coverage to one UM and/or one UIM policy, no matter how many policies the owners of multiple cars paid for. This will allow for people to recover UM/UIM coverage on policies they have paid for, up to three vehicles.
7. Umbrella coverage: Requires that the policyholder reject in writing the offer of UM/UIM coverage for umbrella or excess liability policies. This follows the decision in Rebernick v. Wausau General Ins. Co., 2006 WI 27 for UIM coverage. This reverses the exemption of UM coverage in umbrella policies in WIS. ADMIN. CODE § INS 6.77(4)(a) (March 2008).
8. Makes the remedy for not offering UM/UIM coverage in an umbrella policy a reformation of the policy to the same limits as the liability coverage limits under the policy. This change should limit the restriction under Stone v. Acuity, 2008 WI 30.
9. Hit and run claims: Insurance companies will no longer be able to deny coverage for hit and run accidents because no physical contact occurred, reversing DeHart v. Wisconsin Mutual Ins. Co., 2007 WI 91. Now with independent third party verification drivers who are injured will have access to UM coverage.
10. The minimum coverage for medical payments coverage is increased from $1000 to $10,000 per person. The coverage can still be rejected. Persons can also stack medical payments coverage, but may be limited to three vehicles.
11. Prohibits a health insurance plan from not providing coverage on the basis there is coverage under a liability insurance policy.
12. The Governor did veto the “drive other car” exclusion provision. The Wisconsin Insurance Alliance says of this veto that the provision “would have allowed coverage on cars not covered under an insurance policy.» Note: People buying insurance should be encouraged to have all of their vehicles covered under one policy, not multiple policies to provide maximum coverage.

Effective Date: The changes will first apply to motor vehicle insurance policies that are issued or renewed on the first day of the fifth month after publication. Publication occurred on July 1, 2009.