Wis. Lawmakers Debate Auto Insurance Minimums

UPDATE: A key author of a bill that would dramatically reduce mandatory car insurance levels in Wisconsin says government shouldn't dictate coverage levels.

January 19, 2011
By Zac Schultz

Madison: By all accounts, most people in Wisconsin haven't been bothered by having to carry more liability insurance on their car.

"While you and I and most of us in this room may not have seen those increases the folks struggling today have," says Rep. John Nygren (R-Marinette). Nygren says he wants to rollback the higher state minimums beause some poor people may not be able to afford more insurance and are therefore going without. "Our fear is that by mandating those increased limits at the worst possible time, more people are at risk, because there's more people on the road that are uninsured."

A provision in the 2009 state budget mandated every driver have auto insurance and carry at least $100,000 per person and $300,000 per accident in liability insurance.

Nygren's bill would keep the mandate on having insurance, but go back to the old standard of $25,000 per person and $50,000 per accident.

Robert Kraig and Citizen Action of Wisconsin have been busy opposing almost every piece of Republican legislation this session. They don't like this either, saying when the minimums are too low drivers are underinsured and accident victims don't have enough coverage to pay their bills.

Also, they say the new levels haven't raised rates. "In terms of public filings by insurance companies there has been no evidence of this rate escalation because of the reforms," says Kraig. "In addition, national research found that in 2010 Wisconsin rates were still fourth lowest in the nation."

But a bigger concern for groups like Citizen Action of Wisconsin and the Wisconsin Association for Justice (trial attorneys) is the bill would remove provisions dealing with stacking policies and underinsured motorists.

Daniel Plumb says his father Carroll was severely injured in a motorcycle crash last July. Carroll was taken by helicopter to a hospital and spent weeks in intensive care. He is still hospitalize and his bills are more than $1 million.

Plumb's attorney is Jason Abraham, who says, "The medical bills to date are already over a million dollars. The at fault driver had $250,000 of coverage, which they have tendered."

Carroll Plumb had $300,000 worth of underinsured motorist coverage on each of his two motorcyles. Because current law allows him to "stack" his policies along with the other person's policy, insurance has paid out $850,000.

However, under the old law and under Nygren's proposal, Plumb would only be eligible for a total of $300,000. That's because the underinsured motorist law says insurance only pays out a total of what you are insured for. In this case the other driver's policy would have paid out $250,000 and Plumb's would have paid $50,000. But once Plumb got to the $300,000 in coverage insurance was done. The new proposal would also not allow stacking policies.

Daniel Plumb says, "Without the bill that is in place, my father would not be able to collect on his uninsured motorist claims. He would only be allowed what the individual that hit him has on his claim for insurance. My father and mother would have to claim bankruptcy. As the victim, they'd lose everything."

Rep. Nygren says stacking policies just costs more money and will increase premiums. "Providing more opportunity for potential liability claims and in the long run increasing costs."

He also says when people buy $300,000 worth of underinsured motorist coverage, that's what they get. If the other party pays $250,000, and their coverage pays $50,000, they still get their $300,000 in coverage. "I think it's semantics, but the most difficult thing is the average person doesn't understand insurance."

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