Truth in Auto Insurance – A Summary 

  • Prohibits reducing clauses in automobile policies.   The purpose of UM and UIM coverage is to protect injured parties when hurt by uninsured or underinsured motorists. Under current law, insurance companies are allowed to deduct certain payments from UM and UIM coverage, resulting in injured policyholders not getting the coverage they have purchased. Policyholders should receive the proceeds of UM and UIM coverage that they have paid for – up to the amount of damages suffered – without reductions. To do otherwise results in coverage that is illusory and against the reasonable expectations of policyholders.
  • Prohibits anti-stacking provisions in automobile policies. Where the insurance company has issued two or more policies and separate premiums are paid, the policyholder should be entitled to coverage under both policies if the injured person’s damages exceed one of the policies.
  • Requires a Common Definition of Underinsured (UIM) Coverage. Today there is no common definition of UIM coverage and each insurance company has their own definition. This bill would require insurance companies to define UIM coverage by comparing the negligent driver’s liability insurance limit with the amount of damages (or injuries) actually sustained by the policyholder. This allows injured policyholders to receive the full amount of UIM coverage they purchase.
  • Raises the limits of liability for injury in an auto accident from $25,000/$50,000/$10,000 to $100,000/$300,000/$25,000. It has been over 25 years since the minimum amount of auto insurance has changed. In that time costs for health care have skyrocketed. People who cause accidents should pay for the injuries they cause and not put the burden on those injured and taxpayers.
  • Eliminates the requirement that a vehicle be “hit” by an unidentified driver to be considered an “uninsured motorist.” Under current law, if a party is run off the road, but does not sustain a physical “hit,” then a person is denied coverage under his uninsured motorist policy. This would allow uninsured motorist coverage to apply if evidence can be shown by eyewitnesses that an unidentified driver caused the accident, even if there was no physical contact. 
  • Requires insurance companies to offer UM/UIM coverage for umbrella or excess liability policies and defines umbrella or excess liability policies. The Wisconsin Supreme Court has held that the statutory offer of UIM coverage applies to umbrella policies. This would make it clear that if insurance companies offer umbrella or excess liability coverage that covers motor vehicles, they must offer UM and UIM coverage in writing to the policyholder. Rejection of the additional coverage must be in writing.
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