Debate on auto insurance limits rages on with Senate vote expected Tuesday

By Laurel Patrick  
Wisconsin Reporter
February 7, 2011

MADISON — It was just this past June that new mandatory auto insurance coverage minimums went into effect. Now those minimums are on the chopping block as lawmakers work to repeal them.

The Senate is expected to vote on Tuesday on a  measure that would reduce auto insurance minimums. The new bill still requires that all drivers have auto insurance. The minimums in effect now are $50,000 for injury or death of one person, $100,000 for injury or death of multiple persons, and $15,000 for damage to property. The proposal reduces the coverage limits to $25,000, $50,000 and $10,000 respectively.

The Wisconsin Association for Justice — formerly an organization for trial lawyers —  is opposed to the legislation and held a conference call Monday outlining its concerns. Edward Vopal, president-elect of the WAJ, said his members believe the proposal is anti-consumer.

Additionally, WAJ members have trouble with the aspect of the legislation that allows insurance companies to include a “reducing clause” in policies. Vopal said “reducing clauses” allow companies to reduce insurance coverage in an accident by subtracting the other driver’s insurance from your uninsured motorist policy (UIM), so consumers don’t get the full amount of their purchased UIM coverage.

“We’re concerned that consumers won’t understand the limits and won’t be able to receive the policy limit they paid to include,” said Vopal. “We’re trying to make people aware of these changes and what it means for them.”

The bill’s sponsor in the Assembly, state Rep. John Nygren, R-Marinette, said ”reducing clauses” simply aren’t a problem. Nygren spoke with officials at the Office of the Commissioner of Insurance and found the department has very few complaints regarding “reducing clauses,” so few, in fact, that the department doesn’t track them.

“Very few companies even include reducing clauses,” Nygren said. “This legislation is pro-consumer, and it gives them more choices in terms of coverage.”

Nygren has also said that his legislation was crafted in response to constituents claims that the required higher coverage levels have forced them to completely forgo auto insurance.

State Sen. Tim Carpenter, D-Milwaukee, is also concerned with the aspect of the bill that would reduce coverage minimums for drivers convicted of driving while intoxicated.

“Once a driver has proven to be less responsible by driving drunk, we are all put at a greater risk,” Carpenter said. “Less responsible drivers should not be rewarded with being able to carry auto insurance at the low automobile coverage minimums that were set in 1982.”

Carpenter said he is working to amend the bill to ensure that drivers convicted of DWI do not pay lower insurance rates.

State Rep. Louis Molepske, D-Stevens Point, shares concerns with the WAJ regarding “reducing clauses.” However, Molepske supported the bill out of committee and said he will vote for the bill when it comes up for final action on the Assembly floor. He said that some coverage is better than none, and he wants to compile more information so the legislation can help everyone.

“I want to strike a balance between insurance companies, the injured and the trial bar,” said Molepske. “I want to talk with the Commissioner of Insurance to get a better understanding so premiums are reflective of the services consumers are receiving.”

Molepske said the legislation can be very technical, and many people are only looking at the big picture of what consumers are required to do. He said he wants to make sure those who are injured in a crash are made whole and that people who are injured receive fair compensation.

Andrew Franken, president of the Wisconsin Insurance Alliance, is supportive of the measure, claiming that it gives consumers more power.

“This legislation restores prior law which was not only accessible but puts consumers in charge of their insurance decisions,” said Franken. “How that can be anti-consumer, I don’t understand.”

According to Franken and published information from the WIA, repealing minimums will actually decrease the number of uninsured motorists by making auto insurance more affordable. The same information also shows that the lower limits of 25/50/10 covered 90 percent of auto insurance claims.

Gov. Scott Walker has indicated that he supports this legislation.

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