INSURANCE INDUSTRY MATH DECEIVES CONSUMERS
“Truth in Auto Insurance” provision in state budget will guarantee accident victims the coverage they purchased
Across the state of Wisconsin, consumers are being deceived by the automobile insurance industry when they purchase coverage designed to protect their families from the astronomical personal and financial costs of an accident.
“People deserve to receive the insurance coverage they pay for,” said Mark Thomsen, President of the Wisconsin Association for Justice. “For many consumers insurance industry math adds up to huge unpaid bills in order to boost insurance industry profits.”
The Wisconsin Association for Justice is highlighting the need for the Truth in Auto Insurance provisions contained in the state budget by providing real stories from Wisconsin consumers who have suffered because of a series of little known provisions written into law at the request of the insurance lobby in 1995.
A responsible Outagamie County driver purchased $150,000 worth of underinsured motorist (UIM) coverage to protect himself in the event of an accident with someone who did not have the proper coverage. In addition to buying UIM coverage, the driver also purchased an additional umbrella policy with a limit of $1 million to cover any catastrophic costs that may occur because of a potential accident.
While riding his motorcycle, the Outagamie County driver was involved in an accident with a young driver of a car who turned in front of him, causing a crash. The driver sustained over $300,000 in damages and medical bills. Fortunately the driver of the car had $100,000 in liability coverage.
Now you would think that a combined $250,000 in liability coverage and two umbrella policies in place for $1 million dollars each the injured driver’s damages would be covered, but you would be wrong.
First, though the Outagamie County driver had purchased UIM coverage of $150,000 because of what is known as a “reducing clause” in his policy, he was only able to recover $50,000 from his policy because the amount of his insurance was reduced by the amount of liability insurance ($100,000) the driver of the car carried. That’s right, even though he paid for a policy to provide $150,000 of coverage, the insurance industry math allowed him to use only $50,000.
$150,000 – amount of underinsured motorist (UIM) coverage purchased by motorcycle driver
-$100,000 – amount of liability insurance purchased by automobile driver
$50,000 – amount of UIM coverage actually available to the motorcycle driver
With only half of his damages covered the injured driver of course turned to the umbrella policies each party had in place, yet the trouble continued.
Finally, the injured motor cycle driver turned to his own umbrella policy. Unfortunately, his agent never offered him the option for UIM coverage (despite being required by law to do so) and so he was unable to access this policy either. The insurance company was required to pay $50,000 because the agent never offered the driver UIM according to state law.
In the end the injured motor cycle driver was left with a tremendous debt, though he always assumed he would be covered by the insurance policies that he responsibly had in place and no one ever told him how the process would work if he actually needed to make a real claim.
“It is the sad truth that too many consumers in Wisconsin are not being told the truth when they purchase auto insurance and most never find out the truth until it’s too late,” continued Thomsen.
“The legislature has the opportunity to stand up for Wisconsin consumers and bring back fairness and honesty to the insurance industry by adopting the Truth in Auto Insurance provision in the state budget.”
For more information on the provisions of the truth in auto plan visit www.wisjustice.org.
For more details on this particular tragedy contact the Wisconsin Association for Justice.
Mark Thomsen is the President of the Wisconsin Association for Justice. The Wisconsin Association for Justice stands with consumers to promote a fair and effective justice system for every citizen, not just the privileged and wealthy.