Wednesday, October 12, 2011

New Auto Insurance Bill Signed by Governor Scott Walker

A bill that undoes higher coverage requirements approved by Democrats less than two years ago which would now result to lower car insurance has been signed by the governor of Wisconsin.

This undoing of higher coverage requirements was one of the agenda promised by Republicans during the campaign trail last fall during which they won back majority control of both the Assembly and the Senate.

Briefly after signing the bill and in the front of more than twenty lawmakers, including Rep. Jason Fields, who supports the bill, Gov. Scott Walker exclaimed, “this is one more step in empowering consumers across the state of Wisconsin.” The measure was supported by two parties of the Legislature.

Both state insurance regulators and the insurance industry blamed the inflation of rates to the changes instituted in 2009 on the Democrats. The democrats in turn insisted that the inflation was not caused by higher coverage levels but instead by insurance companies themselves.

Representing insurance companies, Wisconsin Insurance Alliance supports the newly approved bill. The representatives of trail attorneys, Wisconsin Association for Justice, however disaccords the bill, in fear that insurance companies will only lower coverage but not their rates. Furthermore, the inflation of rates was deemed essential as there has been no inflation in insurance rates during the past twenty years.
The bill keeps insurance coverage mandatory, but the required minimums would drop. To illustrate, liability minimums for injury/death to a single person which is $50000 will reduce to $25000; injury/death to two people which is $100000 will reduce to $50000; and finally, damage to property which is $15000 will drop to $10000.

In accordance with today’s laws, all auto insurance policies are required to include underinsured coverage. This coverage, which was optional before, would be utilized when the driver at-fault has lower liability limits than the reparation costs caused by an accident. Although the bill signed by the governor still keeps this coverage compulsory, required rates per person have now been reduced by 50%, from $100000 to $50000, and required rates per accident have reduced by 66.67%, from $300000 to $100000.

In addition, the bill, which will take effect on November 1, forbids a practice recognized as “stacking”. This custom allows the motorist at-fault in an accident with a covered vehicle to utilize the uninsured and underinsured coverage from up to three other vehicles to cover damages.

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