Types of Insurance Coverage
There are several types of auto insurance coverages you should know about in case you are in a car wreck or when discussing your coverage with your insurance agent. They are:
(1) Liability Insurance: This coverage protects you for damages or injuries you cause other people through the use of your car. It also protects passengers in your car, people in other cars or pedestrians that you injure.
2) Property Damage Liability Insurance: This coverage protects you for damages you cause to other cars, houses, light poles, etc. It does not cover damage to your vehicle.
3) Uninsured Motorist Coverage: This insurance covers you, your passengers or you as a pedestrian if you are injured by a person who does not have auto insurance.
4) Underinsured Motorist Coverage (optional coverage): This type of coverage pays for your damages or a passenger’s damages if another driver does not have enough liability insurance coverage to pay for your damages. Thus if the other driver only has $25,000 in coverage and you have $50,000 in bills, you can use your underinsurance coverage from your insurance company to pay for the additional damages (subject to the new rules changes below).
5) Medical Payments Coverage (optional coverage): This type of insurance pays you or others in your car for medical or funeral expenses no matter who is at fault for the car wreck..
New Wisconsin Laws
Wisconsin laws regarding auto insurance coverage have recently changed. The new changes affect the above types of insurance coverage. Below are the changes that were recently made.
(1) Insurance is still required for every vehicle but the amount of coverage the insurance companies must offer has changed. The minimum amount of liability coverage was lowered to a minimum of $25,000 per person or $50,000 per occurrence. There is a minimum amount of $10,000 required for property damage. There is a minimum amount of $25,000 per person or $50,000 per occurrence for uninsured motorist coverage. There is a minimum of $50,000 per person or $100,000 per occurrence for underinsured motorist coverage. And, there is a minimum amount of $1,000 for medical payments coverage.
2) Insurance companies can now individually define what underinsured motorist coverage means. You need to have underinsured coverage in case the at-fault driver does not have enough coverage to cover your damages. Insurance companies may now reduce the amount of underinsured coverage by the amount of liability insurance of the other driver. You can still ask your agent for coverage that does not reduce the amount of your underinsured coverage.
3) Insurance companies can now use reducing clauses to reduce the amount of coverage you have under your policy. These reducing clauses limit your uninsured (UM) and underinsured (UIM) coverage by payments made by another driver’s insurance company, worker’s compensation payments or even disability payments. Make sure to ask your agent if you can buy a policy without these clauses.
4) *New requirements for “phantom vehicle” car wrecks: If you are run off the road or suffer an injury from a vehicle that makes no contact with you or your vehicle (a so-called “phantom vehicle”) you are now required to:
a. Have a witness who corroborates what happened. The witness cannot have a claim of their own as a result of the accident;
b. Within 72 hours of the incident, a report must be made to law enforcement;
c. Within 30 days, you must file a report with your insurance company under oath detailing the facts of the case.
What you should do with this information
You should sit down to talk to your insurance agent to see if you have the appropriate amount of coverage. You should opt to have underinsurance coverage (UIM) to protect yourself from a driver who has very little liability coverage. You should also have medical payments coverage to help pay for medical bills for any car crash you are in. You should definitely see if you can avoid a policy that has reducing clauses . If you can avoid the reducing clauses you will get exactly what you pay for. If you don’t, then you could potentially get much less or nothing for your hard earned money.
For example, if you are in a bad car crash and have $200,000 of medical bills and the at-fault driver has $100,000 in coverage, you will need underinsured coverage of $100,000 to pay the rest of the bills. Under the old laws you would be fine. However, now that insurance companies can use reducing clauses you would likely get $0.00 of coverage because a reducing clause will reduce the amount of your underinsurance coverage by the amount you receive from the at-fault driver. In this example, even though you have paid for $100,000 of underinsurance coverage you will not see a dime of that due to the reducing clause.