Many Wisconsinites are coming into the New Year faced with an almost certain increase in their car insurance rates. In late November 2009, Governor, James Doyle included Auto Insurance Reform as a component of his 2009-2011 Wisconsin Budget Bill. The bill raises the state's minimum requirement for car insurance coverage, but it also contains the Truth in Auto Insurance statute. Signed into law in June 2009, this statute insists that auto insurance companies abide by promises made on the front disclosure page of Wisconsin auto insurance coverage policies.
Since 1995 insurance companies have been able to peel away the benefits advertised to and paid for by customers as time when by on their policies. For years, insurers could rely on the fine print in policies to determine benefits paid out. Most consumers understand and rely upon information they gather when they obtain a car insurance quote. Governor Doyle's new laws require insurance companies to provide the coverage that the consumer bargained for regardless of how the language of the policy might reinterpret it.
This new law makes it illegal for insurance companies to insert "reducing clauses"that previously allowed them to eliminate a portion of benefits. For example, if you were hit and injured by someone who carried only $50,000 of coverage, you might think your insurance benefit would pay what your policy indicated. If you paid for $100,000 of underinsured motorist coverage you could sleep at night knowing that your medical bills up to $150,000.00 would be covered by a combination of the two insurance policies. Guess again. Under the 1995 Wisconsin insurance law, your insurance company could deduct the $50,000.00 provided by the underinsured, pocket your premiums for the $100,000 worth of coverage and cut you a check for $50,000. The new Wisconsin law protects consumers by doing away with such practices.
The new law also reestablishes the practice of "stacking"coverage, making it possible for policyholders to take advantage of the benefits of multiple insurance policies. Since 1995, insurance companies have inserted "anti-stacking"language into the fine print of policies. That allowed them to pay benefits on only one policy and block coverage on additional policies, even if the insured was not completely covered. Now, Wisconsinites will be able to use benefits from up to three of their policies. In addition, the new "Truth"law includes language to protect policyholders in the event of a hit-and-run accident.
Essentially this new law is aimed at making sure consumers of car insurance products get exactly what they pay for. Even though the bootstrapping of these new laws to the governor's budget seemed a bit of a questionable strategy, perhaps the end justifies the means.