Act 28: State mandates impact insurance coverage
Last updated: 7/29/2010 4:15:06 PM
Statewide insurance mandates included in Wisconsin Act 28 (the budget bill that passed in the summer of 2009) will impact all Wisconsin residents with automobile and umbrella coverage as well as all insurance companies offering these insurances in the state. Click on a category below for a description of the law changes and its impact on consumers.
Mandatory Auto Insurance
Increased Financial Responsibility Limits (Auto)
Uninsured and Underinsured Motorist (UM and UIM) Coverage
Insurance History Blackout
Reducing Language Prohibited
Mandatory auto insurance(top)
Wisconsin joins the 40+ states that require liability insurance to operate a motorized vehicle. Effective June 1, 2010, the owner of a motor vehicle must have a liability policy that meets the minimum requirements for proof of financial responsibility.
Minimum Property Damage limits increased on auto policies(top)
Effective January 1, 2010, minimum Property Damage limits are increased from $10,000 to $15,000. Property Damage coverage protects you if you are at fault for damage to another person's property, such as a car, its contents, or other property you damage in an accident (e.g., garage, house, fence, trailer).
Minimum Bodily Injury limits increased on auto policies(top)
Bodily Injury coverage does not protect you or your car directly. If you cause an accident injuring other people, it protects you against their claims up to the stated amounts for medical expenses, lost wages, pain and suffering, and other losses. It will also usually pay if the accident was caused by a member of your family living with you or a person using your vehicle with your consent. It does not pay for bodily injury you may sustain.
Effective January 1, 2010:
- If you have auto insurance, you must have enough to satisfy the new mandated minimum limits.
- Minimum Bodily Injury limits are increased from $25,000 per person and $50,000 per accident to $50,000 per person and $100,000 per accident.
Impact on consumers:
If you currently have Bodily Injury coverage limits lower than the new minimum, or you do not have Bodily Injury coverage, your carrier may automatically add this coverage to your policy.
Medical Payments (Med Pay) minimum limits increased on auto policies(top)
Med Pay coverage pays for necessary medical care for you or others covered by your policy resulting from an accident.
Effective November 1, 2009, the Medical Payments minimum limit has been raised from $1,000 to $10,000. You do not have to purchase Med Pay coverage.
If you currently have insurance with WEA Property & Casualty Insurance Company and currently have a Med Pay limit under $10,000, including no Med Pay coverage, we will automatically increase your coverage to $10,000 on your renewal date even if you have previously rejected the coverage. You may reject the coverage by notifying us in writing.
Impact on consumers:
Consumers have access to significantly higher coverage for medical payments. For those who choose this endorsement, the increased coverage will be reflected in their premiums.
UM and UIM coverage minimum limits on auto policies(top)
UM and UIM coverages pay for your expenses or the expenses of others covered by your policy if an injury is caused by an uninsured or underinsured driver.
Effective November 1, 2009, the minimum limits for UM and UIM coverages on auto policies are increased to $100,000 per person and $300,000 per accident ($100,000/$300,000).
Impact on consumers:
Increased coverage means added expense for the insurer, which will likely be reflected in insurance premiums.
Mandatory UIM coverage on auto policies(top)
Effective November 1, 2009, all auto insurance policies must now include UIM coverage. (UM coverage was required prior to Act 28.)
UM and UIM coverages on auto policies are not optional, and there is no option to reject these coverages.
Impact on consumers:
Increased coverage means added expense for the insurer, which will likely be reflected in insurance premiums.
Stacking of UM and UIM limits on auto policies(top)
Effective November 1, 2009, the new law requires UM and UIM coverages to “stack” or be added together on multiple-vehicle policies (up to three vehicles). This means that if you have UM and UIM coverages of $100,000/$300,000 and you have three vehicles on your policy, you would effectively have limits of $300,000/$900,000.
Impact on consumers:
Your insurance renewal rates may increase to reflect the additional coverage. However, because the new law expands your coverage, you may now have more insurance coverage than you need. If you have multiple vehicles, you may want to discuss your situation with your insurer and explore the coverage options available to find the right balance between your coverage needs and cost.
Stacking of Uninsured Motorist and Underinsured Motorist (UM and UIM) On umbrella policies(top)
Effective November 1, 2009, the new law requires UM and UIM coverages to “stack” or be added together on additional liability (umbrella) policies. This means that if you have UM and UIM coverages of $300,000 on your umbrella policy and you have three vehicles on your auto policy, you would effectively have UM and UIM limits of $900,000 on your umbrella policy. This coverage is in addition to the UM and UIM coverages on your auto policy.
WEA Property & Casualty Insurance Company will automatically add $300,000 UM/UIM coverage to your umbrella policy upon your policy renewal date unless we have received a signed rejection form for each coverage you are rejecting.
NOTE: Insurance companies must now make a one-time written offer for UM and UIM coverage to all umbrella policyholders. You do not have to purchase UM and UIM coverages on your umbrella policy and may reject one or both of these coverages in writing.
Impact on consumers:
Because the new law expands your coverage, you may now have more insurance coverage than you need. If you have multiple vehicles, you may want to discuss your situation with your insurer and explore the coverage options available to find the right balance between your coverage needs and cost. The increased exposure for the insurer will likely result in premium adjustments. If you have questions about Act 28 or would like help evaluating your coverage options, please give us a call at 1-800-279-4010 or sign up for a personal phone consultation at a time that is convenient for you.
Change in definition of Underinsured Motorist(top)
The definition of an underinsured motorist changed from “one who has Bodily Injury limits that are less than your UIM limit” to “one who does not have sufficient limits to cover your damages.”
Impact on consumers:
The new definition will make it easier for consumers to make underinsured motorist claims.
Insurance history blackout(top)
Insurance companies may not apply a premium surcharge to individuals who had no prior insurance.
Reducing language prohibited in auto and umbrella policies(top)
In the past, if you had a UM, UIM, or Med Pay claim and received a portion of that claim from other sources, you could access your UM, UIM, or Med Pay to cover the balance of your claim. Your insurance company may have reduced your coverage by the amount you already received.
Example: If you had a claim for $200,000 and the underinsured motorist who hit you already paid for $150,000 of the total, that amount would be deducted from the limit of your policy, paying you $50,000 to cover the balance of the $200,000 claim. This is referred to as reducing.
As of November 1, 2009, reducing is no longer allowed, thus you would have access to coverage up to the limits of your policy even if a portion was already paid. If your UIM limit was $100,000, you would have access up to the $100,000, regardless of what may have already been paid by other sources.
Impact on consumers:
Consumers will have access to significantly greater coverage even if it exceeds the claim amount; however, the increased exposure for the insurer will likely result in increased premiums.
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