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M3 Financial
January 4th, 2010

Wisconsin Budget Bill Changes Auto Insurance Requirements

Governor Jim Doyle signed Wisconsin’s biennial budget bill on June 30, 2009. The budget bill contained several provisions affecting auto insurance in the state, including making auto liability coverage mandatory and increasing minimum limits. Policyholders may see an increase in premiums as a result of these law changes.

Mandatory Auto Insurance Requirement

Effective June 1, 2010, auto insurance will become mandatory in Wisconsin. No one will be able to operate a motor vehicle unless the owner or operator of the vehicle has a motor vehicle liability policy in effect covering the vehicle being driven. Drivers will also be required to show proof of motor vehicle liability insurance at all times while driving. Commercial motor vehicles being operated with the owner’s permission are exempt from the requirement as long as the vehicle is covered as required under a commercial motor vehicle policy. There are a several other exceptions applicable to bonding, self-insurance, and cash deposits meeting minimum requirements. This law is not applicable to vehicles already subject to financial responsibility requirements for rented and human service vehicles, or governmental vehicles, all of which must meet minimum liability requirements under existing law.

Increased Minimum Limits for Auto Insurance

Minimum limits for auto insurance are increasing in Wisconsin. Uninsured, Underinsured & Medical Minimum Limits increase effective November 1, 2009. Uninsured motorists coverage limits have increased to a minimum of $100,000 per person and $300,000 per accident. Underinsured motorists coverage limits have increased to a minimum of $100,000 per person and $300,000 per accident. The law also clarifies definitions of “uninsured” and “underinsured”, and makes underinsured motorists coverage mandatory. Medical payments coverage, still optional under the law, has increased to the amount of at least $10,000. Insurers that provide umbrella or excess liability coverage that include auto liability coverage must provide written offers of uninsured and underinsured motorist coverage under this law.  Bodily Injury or Death minimum limits increase effective January 1, 2010 to December 31, 2016 to $50,000 for Bodily Injury to or Death of One Person in any one accident and $100,000 for Bodily Injury to or Death of Two or More Persons in any one accident. For individuals that have policies issued for the purpose of complying with financial responsibility requirements the rule takes effect on January 1, 2010, otherwise it is effective June 1, 2010.

Stacking Auto Limits Permitted

Effective November 1, 2009, individuals will have the ability to stack their uninsured and underinsured coverage limits as long as they insure three or less vehicles. This is a reversal of the current law which prohibits such stacking. A similar law change prohibits insurance carriers from deducting the amount of insurance carried by a negligent driver from the uninsured or underinsured coverage purchased by an injured policyholder. This allows the policyholder to access the full amount of insurance they have purchased.

**This Legislative Alert is a general summary of regulatory issues and does not constitute legal advice. Readers should contact legal counsel for legal advice.

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