Industry Questions Wisconsin Gov.’s Hike in Auto Insurance Limits

By | February 20, 2009

A proposal in Wisconsin Gov Jim Doyle’s budget would increase mandatory auto insurance limits and drive up costs for many drivers as much as 40 percent, according to the insurance industry.

The governor would raise the current liability limits of $25,000 for each person, $50,000 for each accident, and $10,000 for property damage per accident to $100,000, $300,000 and $25,000, respectively.

This change would mean Wisconsin would have the highest mandated insurance limits in the nation.

Andy Franken, president of the Wisconsin Insurance Alliance, said the result would be higher costs for many low and middle-income families.

“Responsible low and middle-income families paying the current minimum auto insurance levels would see their costs rise 33 percent to 43 percent. High income families who already choose higher coverage levels would be less affected, but would still see premium increases,” said Franken.

The industry says that the largest dollar increases would fall on families in the Milwaukee area. Families in rural areas, especially in western Wisconsin, would see the highest percentage increase in their auto premiums.

Only four states require limits greater than Wisconsin’s current limits.

“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,” Franken said.

According to the Auto Insurance Report’s PAIN index, Wisconsin families pay the third lowest rates as a percentage of household income.

The industry maintains that the change would also have other implications.

Mark Johnston, Midwest state affairs manager for the National Association of Mutual Insurance Companies (NAMIC), said the governor’s proposal would also undo tort reforms that protect defendants who bear little responsibility for an accident. Someone who is barely connected to an accident could end up paying the entire amount of the damage. “An example would be when an uninsured drunk driver causes a horrific accident. The plaintiff’s lawyer will strain to look for someone else with insurance, such as another driver or a property owner near the scene of the accident, who somehow can be said to have contributed to the accident,” Johnston said.

The proposal would also drive up costs by allowing the “stacking” of insurance policies, requiring uninsured motorist coverage when an accident is caused by a phantom car, which would result in increased fraud, and increasing the amount of paperwork required, according to Johnston.

“These are significant public policy changes, and they need to go through the proper legislative process where there is time for analysis and public comment,” Johnston said. “Sticking the legislation in the budget greatly reduces the opportunity for scrutiny and usually creates legislative mistakes.”

Topics Auto Wisconsin

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