Industry Questions Wisconsin Gov.’s Hike in Auto Limits

A proposal in Wisconsin Gov Jim Doyle’s budget to increase mandatory auto insurance limits would 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.

Andy Franken, president of the Wisconsin Insurance Alliance, said the change would raise costs for many low and middle-income families as much as 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 would see the highest percentage increase.

Highest Limits

The change would mean Wisconsin would have the highest mandated insurance limits in the nation. Only four states require limits greater than Wisconsin’s current limits.

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 have other implications, too.

Mark Johnston, Midwest manager for the National Association of Mutual Insurance Companies, said the governor’s proposal would also undo tort reforms so that 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 so-called “stacking” of insurance policies, requiring uninsured motorist coverage when an accident is caused by a phantom car, which would increase fraud and paperwork, 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