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New WI Auto Law Eliminates Coverages - Protect Yourself Before Changes Come in November
Carroll Plumb’s medical bills exceeded $1 million after he was severely injured in a 2010 Sheboygan County motorcycle accident. Yet, the driver at fault only had liability insurance of $250,000. Luckily, Carroll had purchased $300,000 of underinsured motorist (UIM) coverage for each of his two vehicles. Under current law, Carroll can recover $850,000 – $250,000 from the negligent driver and $600,000 from both UIM policies. Not so fast! As of Nov. 1, 2011, Carroll would only get $300,000, a difference of $550,000! You should know what to do now to protect yourself so this doesn’t happen to you later.
Protect Yourself: Do Your Homework
Step 1: Analyze Your Policy
Review your auto policy at renewal, especially before the law changes.
Sit down with your agent ASAP and make sure you have adequate insurance by understanding exactly what your policy covers – especially with new laws going into effect in November.
- Check your liability limits.
If you are at fault in an accident and the other driver’s damages exceed your liability limits, you can be held personally liable. And don’t get tricked into thinking that the minimum amount of coverage required in Wisconsin will protect you. Effective Nov. 1, the limits will decrease to only:
- $25,000 for bodily injuries caused to one person
- $50,000 for bodily injuries for all persons
- $10,000 for property damage
While this may seem like a lot of money, it will quickly vanish in a serious accident with high medical bills and other costs. In most cases, you should buy the highest level of coverage you can comfortably afford that covers your personal assets – home, business or other investments.
- Protect yourself against the underinsured and uninsured.
An estimated 15 percent of Wisconsin motorists are not insured. Uninsured motorist (UM) and underinsured motorist (UIM) coverage is critically important to guard against the risks of an accident with someone carrying inadequate or no insurance. Starting Nov. 1, UIM will be optional, but don’t be fooled. Buy at least enough UM/UIM to match your liability insurance.
- Review the “options:” comprehensive, collision and medical payments coverage.
Your first priority should be protecting yourself and your family with adequate levels of liability and underinsured/uninsured benefits. If you’ve achieved that goal, then decide if the annual cost of comprehensive, collision or medical payments coverage makes sense. (For more info, download Wisconsin Insurance Coverages.)
Step 2: Get Confirmation on New Coverages
Tell your agent what you want for insurance coverage;e.g., liability, UM/UIM, medical payments, etc. At a minimum, you want the exact same coverage that you have now without any changes. At (or immediately after) your meeting, confirm in writing that you and your family are insured at the levels you selected.
Step 3: Beware of the Fine Print in Wisconsin’s New Law
Because of the November changes in Wisconsin law, understand your policy and make sure you are getting what you paid for:
Flaw 1: Underinsured Motorist Coverage – Currently, when you buy $100,000 of UIM coverage, for example, you can get $100,000 above and beyond the other driver’s liability limit. The new law allows the insurance company to redefine UIM so that you may not be able to recover anything from your UIM coverage, depending on the other driver’s liability limits.
Flaw 2: Reducing Clauses – Under the new law, insurance companies will be allowed to reduce UM/UIM coverages to reflect the insurance carried by the driver who caused the collision, as well as workers’ compensation benefits or other disability payments. Many people may be financially ruined because they aren’t aware of these reductions and think they have sufficient coverage.
Flaw 3: Phantom Drivers – Some accidents are caused by a driver who doesn’t actually hit another vehicle. Under current law, you can still collect UM coverage if an independent third party verifies that a “phantom” driver caused the accident. Under the new law, you must also file a statement under oath within 30 days after the accident.
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