Smart Auto Insurance Blog

Wisconsin is now requiring all drivers to carry auto insurance and with increased coverage, it could mean increased premiums.  According to the article “Auto Insurance Changes for June” by Kristin Crowley on fox11online.com the law that was meant to increase driver safety may backfire.

As coverages for Wisconsin auto insurance increases so will premium costs, which may cause more people to go without auto insurance.  This goes against the whole reason for the new law in the first place.  Wisconsin Insurance Alliance President Andy Franken states that about 14% of Wisconsin drivers are currently uninsured.

It is still to be determined how premiums will be affected by the new law, but one thing is for sure.  If you choose to drive without insurance it’s going to cost you.  The Wisconsin Department of Motor Vehicles states that driving without insurance will cost up to $500.  Even more expensive is fraudulent insurance issues which will be fines up to $5,000.

It has been a common practice of auto insurance companies to use location as a factor in determining auto insurance rates.  According to the article “Proposal would eliminate ZIP codes as factor in Wisconsin car insurance rates” by Paul Gores of the Journal Sentinel, WI state legislature wants auto insurance companies to stop using zip codes.

Some of the Democratic legislators have brought this plan back despite a similar plan being vetoed by Gov. Jim Doyle back in June.  Auto insurance rates can be up to 60% higher in areas that are heavily populated.  This may seem unfair for those living in urban areas, but the auto insurance companies claim it is part of mitigating risk.  The current system gives higher rates to those in bigger cities because more theft, accidents and vandalism generally occurs in these areas.

The auto insurance companies also point out that if zip code was not allowed to be a factor, rates would increase substantially for those living in rural areas.  There would simply be an overall redistribution of premiums.  Auto insurance companies look at many different factors including driving record and credit score.  The Governor will have to review this bill and see if it will be considered.

As of June 1, 2010, Wisconsin will become the 49th state in the US to require drivers to have auto insurance coverage.  The only state left to not have this requirement will be New Hampshire.  This is according to the article “Are you a Wisconsin driver? You’ll need auto insurance by June” by Paul Gores on JSOnline.com. 

It is surprising to many that there are still 2 states that do not require auto insurance since 48 states have required it for years.  Senator John Lehman (D-Racine) believes having auto insurance is viewed as a responsibility of being a good US citizen.  If you cannot manage affordable auto insurance, then you probably cannot afford to pay if you are in an accident, therefore should not be on the road to begin with. 

But the Insurance Information Institute in NY is questioning the effectiveness of having an auto insurance mandate anywhere.  A study by the Insurance Research Council estimates that in 2007, 15% of Wisconsin drivers were uninsured, and that is only slightly higher than the national average of 13.8%.  Even in the states where proof of insurance is required to register a car or get a license, it doesn’t mean the driver is keeping the insurance once they walk out the door.  They can very easily turn around and cancel their policy or just not pay their premiums to save money.  The only way they would get caught is if they were in an accident or got pulled over.  This is of course against the law in 48, soon to be 49 states.  Whether your state requires auto insurance or not, there is no question that it’s important to be covered for your financial safety and for the safety of other drivers on the road. Getting multiple auto insurance quotes is the best way to see what’s available.

According to the article “Car Insurance Mandate in Wisconsin Budget; No Driver’s Card for Illegals” on insurancejournal.com, Wisconsin auto insurance policy holders will have to buy liability insurance for their cars, but illegal immigrants will not be issued special cards to drive legally.  This is under the new proposed Wisconsin budget legislature.

This new requirement has been considered and proposed since the 70’s, but never put through because of the insurance industry.  Governor Jim Doyle has expressed his support for the new proposal.  It would take effect next year.  Anyone pulled over with no insurance card would be subject to a fine of $10.

Posing more of a debate was the driver’s card for illegal immigrants.  Immigrant rights groups and the police argue for the cards claiming they make the roads safer by ensuring everyone, even illegal immigrants, carry ID and are able to get auto insurance.  Doyle did not propose this and the Senate rejected it in the Wisconsin budget.

According to the article “Are Your Car Insurance Rates About To Go Up?” by Dan O’Donnell on 620wtmj.com, Previant Law Firm put together some information outlining how the 2009 budget might impact your Wisconsin auto insurance.

The main note is that minimum liability limits will be increased.  They discuss 7 key points on minimum liability coverage.

1. Minimum liability coverage was established to ensure the insured had adequate coverage
2. Coverages were set back in 1982 last
3. Limits are now being raised to reflect today’s costs
4. New proposed limits are $100,000/$300,000/$25,000
5. This will affect 20-25% of insured drivers
6. 75%-80% of drivers already have higher limits so should not see any impact
7. The cost to your auto insurance rates should be small compared to how much more coverage would you would receive

According to the article “Insurer Groups at Odd with Proposed Wisconsin Auto Insurance Bill” on insurancejournal.com, Wisconsin lawmakers have proposed legislation that would increase Wisconsin auto insurance rates for low and middle income auto insurance customers.  This information is according to the National Association of Mutual Insurance Companies and the Property Casualty Insurers Association of America. 

Twenty to twenty-five percent of all insured drivers in WI would be negatively affected by this new Wisconsin auto insurance provision which is in Governor Doyle’s budget.  The initiative includes increasing the required per-person injury limit 4 times the current level by raising personal auto insurance financial responsibility limits, increasing the minimum on medical payments to $100k and also making UM coverage and UIM coverage mandatory at 100/300 limits. 

PCI shows that low and middle income insurance customers in the west, southwest, north and east central counties of WI would have the highest percentage increase in their liability premiums.  Milwaukee would receive the highest dollar increase.

Wisconsin auto insurance liability limits have not changed in 25 years, but may be changing soon.  Two groups:  Citizen Action of Wisconsin, and Wisconsin Association for Justice are seeking to have those minimums increased, and agree with Gov. Jim Doyle who has proposed the limits rise to $100k per individual $300k per accident and $10k for medical expenses.  The current limits are $25k/$50k/$1k.

The driver behind the change request stems from the steep increase in both medical costs and vehicle repair costs over the same time frame, which has made the consumer the loser over time because insurance coverage in many cases is not sufficient to cover the cost of an accident.

Scott Bauer from the Associated Press has reported on the impact Governor Jim Doyle’s new budget could have on Wisconsin auto insurance. The Wisconsin Insurance Alliance is against the provision that would require an increase in the lowest level of coverage available to buy:

• $300,000 in total coverage (formerly $50,000)
• $100,000 in coverage per person (formerly $25,000)
• $25,000 in property damage coverage (formerly $10,000)