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Recent Legislative Changes Under Governor Walker Change Auto Insurance Law
Although the debate over changes in laws relating to collective bargaining gathered the overwhelming majority of the attention by the media and public, prior to that debate the legislature passed some bills that significantly affect consumers’ rights in the context of automobile insurance. For the most part, these new changes go into effect on November 1, 2011. These changes in effect repeal the true in auto laws that were passed in 2009.
A short summary of the changes are as follows: (1) Liability minimums are reduced from $50,000 per person/$100,000 per accident to $25,000/$50,000; (2) Medical payment coverage is reduced from a $10,000 minimum to a $1,000 minimum; (3) Uninsured motorist coverage is reduced from $100,000 per person/$300,000 per accident to $25,000/$50,000; (4) Underinsured motorist coverage is reduced from $100,000/$300,000 to $50,000/$100,000.
The change to underinsured motorist coverage is particularly significant and should be understood by consumers. The true in auto laws that existed prior to the changes set forth by Governor Walker required insurance companies to actually offer to the insured the amount of underinsured motorist coverage that the insured was paying premiums on. Now that has been repealed, insurance companies are allowed to reduce the underinsured motorist coverage limits that the insured has been paying for by subtracting the amount of coverage limits that the at-fault driver has. In other words, if the at-fault driver has $50,000 in coverage, and you have $50,000 in underinsured motorist coverage, you actually will be deemed to have zero coverage available, since $50,000 minus $50,000 equals zero. Although this seems quite unfair since you would have been paying premiums to have that amount of coverage regardless of what any other driver has or doesn’t have, that is the new law. A proposed democratic amendment to at least have the policy explain that provision to the insured was defeated and is not part of the final bill.
The important lesson for consumers to take from this change is that it would be prudent to dramatically increase your underinsured motorist coverage so that you are protected in the event that another diver hits you and causes significant injuries to you or your family. Unfortunately, adding that extra coverage will not change the fact that you will still be paying premiums for some coverage and yet you will not be receiving the full amount of coverage you are paying for.
Finally, the other major change that came about as a result of repealing true in auto is that an insured is no longer allowed to “stack” policies. Previously, an insured was allowed to add the coverages together of up to three different vehicles if the insured was paying premiums on all three of those vehicles. Now, stacking is no longer allowed so that even if you are paying premiums for the exact same coverage on three different vehicles, you are only entitled to the policy limits for one individual vehicle.