Wisconsin Senate to Take up Car Insurance Legislation

Minimum levels of car insurance that were increased two years ago would drop back down again under a bill up for a vote in the state Senate.

Trial lawyers fought for the changes approved by the Democratic-controlled Legislature two years ago, but Republicans in the majority now are looking to repeal the higher requirements in one of the first bills they pass this year.

The measure won preliminary approval from the Assembly last week but a final vote was blocked by Democratic opponents until later this month. The Senate was set to vote on its version Tuesday.

“There was no need for these changes in the first place,” said Andy Franken, president of the Wisconsin Insurance Alliance. The alliance represents insurance companies and lobbied heavily against the changes made in the 2009 state budget.

“Ninety six percent of all claims were covered under the previous minimums,” Franken said. “This provides more choice and affordability for consumers, especially those on the lower- and middle-income bracket.”

Critics blamed the new higher standards for higher insurance costs while Democratic backers said there was no evidence that ever happened. Republicans used passage of the law against Democrats in the 2010 election in which the GOP won control of both chambers of the Legislature.

Trial attorneys and Democrats who supported raising the coverage levels argued it was needed because the old minimums didn’t reflect current costs since they hadn’t gone up since the 1980s. They contend that undoing the increases will allow insurance companies to provide less coverage but not lower rates or premiums accordingly.

Franken said with 200 insurance companies competing for business in the state, that will not happen.

“It is ridiculous for government to force people to buy insurance they may not need nor cannot afford,” Franken said.

Edward Vopal, president-elect of the trial attorneys’ group the Wisconsin Association for Justice, called the proposed changes “drastic measures that would substantially limit the rights of Wisconsin consumers.”

His group has argued that the law will allow for changes in policies that drivers won’t know exist but that limit their coverage and make it tougher for them to collect following an accident.

Gov. Scott Walker, a Republican, supports repealing the increases.

Under the bill, car insurance would still be mandatory but minimum required levels of liability, underinsured and uninsured coverage would all drop.

Currently, all auto insurance policies must have underinsured coverage. That coverage, which had been voluntary, is for when another motorist causes an accident and has lower liability limits than the amount of damages in the accident.

The bill would once again make that coverage voluntary, as it was prior to the 2009 law change. Additionally, the level of coverage required by those who choose to buy it would be lowered.

The bill would also:

Require a driver caught up in an accident that didn’t involve contact with the other vehicle to swear an oath that there was indeed another car and submit it to his or her insurance carrier within 30 days.
Bar policy holders from “stacking” coverage, which was legalized in 2009. Stacking refers to insured motorists involved in an accident with a covered vehicle applying uninsured and underinsured coverage from up to three other vehicles to help pay for damages.
Allow insurers to put drivers buying insurance for the first time into a high risk category that could cost more.
Allow insurers to put “reducing clauses” into their policies that could lower the amount drivers collect when they are in an accident with underinsured drivers.

The changes would take effect six months after the governor signs the bill once it clears both houses of the Legislature.