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| 10/16/2009 8:29:00 AM | Email this article • Print this article | GOP: Budget changes will cause auto insurance premiums to jump
Lawyers hail ‘truth-in-auto insurance’ provisions
Call it sticker shock, call it what you will, but be prepared for a higher auto insurance bill the next time your coverage is renewed, if Republicans and the insurance industry are correct in their assessment of new automobile insurance laws.
Indeed, Gov. Jim Doyle and the Democratic majority in the Legislature included a number of insurance changes and mandates in this year's state budget bill, such as higher coverage minimums and applying coverage limits for all vehicles in multiple-vehicle policies to a claim from an accident involving just one of the cars.
The changes are beginning to take effect, and will impact insurance premiums upon a policy's renewal. Here's the kicker, according to state Rep. Jeff Fitzgerald (R-Horicon) - none of the changes had anything to do with balancing the state budget, though they were buried in the budget bill.
The fiscal impact on taxpayers is zip, he says; the financial effect on auto insurance payers is significant.
One of the most substantial changes to the law will be the boost of minimum liability insurance limits on Jan. 1, 2010 - they will increase from $25,000 to $50,000 per person, from $50,000 to $100,000 per incident and from $10,000 to $15,000 for property damage - and a so-called stacking provision on Nov. 1 that will double coverage limits for each vehicle covered by a two-vehicle policy and triple them for policies covering three or more vehicles.
The stacking provision means coverage limits from vehicles not involved in an accident will be "stacked" on the coverage limit for the vehicle in an accident. So a two-vehicle policy with a maximum of $1 million coverage on each vehicle will now provide $2 million in coverage on each vehicle.
What it all means is higher insurance rates for motorists who don't want or need the added coverage, according to Andy Franken, president of the Wisconsin Insurance Alliance. Specifically, he said, the new mandates will cause auto insurance rates to rise by more than 33 percent.
"As a result of the increased costs, the number of uninsured drivers on state roads will increase dramatically and that's bad for all motorists," Franken said when the governor released his budget proposals. "... These auto insurance mandates have nothing to do with Wisconsin's state budget or fiscal crisis and should be debated publicly as separate legislation on its merits."
In an Oct. 2 column (see his column, page 9 of this edition), Sen. Scott Fitzgerald (R-Juneau) estimated the changes will cost the average consumer between $96 and $309 per year; a number of constituents have already called his office concerned about auto insurance rates doubling or tripling, he said.
The bottom line, according to Sen. Fitzgerald: Wisconsin's auto insurance rates will jump from the third lowest in the nation to one of the highest, and, as a result, despite a new law requiring everyone to purchase coverage, many simply won't be able to, while others will drop the insurance they have.
Sen. Fitzgerald and other lawmakers contend the changes weren't needed. He cited Insurance Research Council numbers showing that 96 percent of all bodily injury claims were $15,300 or less, well below the current minimum of $25,000, he wrote, while the average property damage claim in the state was $2,500, well below the current minimum coverage of $10,000.
The Wisconsin Insurance Alliance says the stacking provision alone will increase uninsured and underinsured motorist costs by more than 38 percent. By doubling or tripling (depending on the number of vehicles in the family) the coverage on each of the vehicles, the WIA states, families are forced to pay for more coverage than they need, want or can afford to purchase.
The law also expands the underinsured motor vehicle definition. In the past, the underinsured motor vehicle definition compared the at-fault driver's liability limits to an insured's underinsured motorist coverage limit, but the definition now compares the at-fault liability limits to the insured's actual damages.
The WIA says that change will vastly increase the number of underinsured motorist claims, lead to "perpetual litigation" and increased rates.
Trial lawyers
There is one group supporting the changes: Trial lawyers.
The Wisconsin Association for Justice - formerly the Wisconsin Academy of Trial Lawyers - hailed what it called "Truth in Auto Insurance" provisions.
"People in Wisconsin deserve to receive the automobile insurance coverage that they pay for," WAJ president Mark Thomsen said earlier this year.
Thomsen said the new laws would bring health care and tax cost savings by forcing automobile insurance companies to honor the coverage consumers buy. By denying policyholders access to coverage they paid for, he said, those involved in auto accidents causing injury have had to use their health insurance or Medicaid to pay for medical expenses.
When a person injured in an accident has two policies for separate vehicles, the injured party should be entitled to coverage under both policies if the injured person's damages exceed one of the policies, the WAJ contends.
The WAJ also said it had been more than 25 years since the minimum amount of auto insurance has changed. Supporters of the changes say between 30 percent and 40 percent of insured motorists already carry the increased mandatory liability limits.
"Gov. Doyle should be commended for standing up for the average consumer," Thomsen said earlier this year. "These changes will protect individuals and businesses from financial disaster and in these tough economic times that's more important than ever."
Will the changes benefit trial lawyers? Some attorneys believe so.
In a September statement, Steve Eisenberg of Eisenberg Law Offices said the new law would increase some settlement amounts significantly by expanding options for personal injury settlements and changing the state's auto insurance restrictions and coverage minimums.
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Reader Comments
Posted: Monday, November 02, 2009
Article comment by:
A democrat
This is great and about time. Lawyers can now protect more people and not get stuck by the evil insurance companies.. and as an added benefit, many people will give up their cars and be forced onto public transit thus saving the earth.
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