Smart Auto Insurance Blog

The Wisconsin Assembly is voting today on a bill which will eliminate some of the higher minimum levels for auto insurance that Democrats put in place back in 2009.  Wisconsin would still have to purchase Wisconsin auto insurance, but supporters say consumers will have lower auto insurance rates and more options to choose from if all goes as planned.

According to the article “Assembly Set to Roll Back Auto Insurance Levels” found on WTAQ.com, critics of the bill say accident victims could be left with a larger bill because their damages would be more than the person’s auto insurance policy coverage.  The bill would end some major consumer protections as well.  If would end “stacking” which is where a driver can use liability on up to 3 of their cars to claim damages when one car gets in an accident.

This bill would also bring back reducing clauses.  This measure reduces a policyholder’s benefits for drivers who are under-insured and high risk drivers would be placed into a class by themselves with high auto insurance rates than others.  The Governor of Wisconsin, Scott Walker, supports the measure and it will be soon determined which way the vote will go.  Many states are facing similar decisions with their auto insurance laws, but Wisconsin is proactively trying to make changes.

According to the article “Mandatory Auto Insurance Hits Wisconsin” by Hilary Dickinson on beloitdailynews.com, as of Tuesday Wisconsin drivers face a $500 fine maximum if they are caught driving without auto insurance.  This is a big change for Wisconsin auto insurance policy holders.

Wisconsin is the 49th state to make auto insurance mandatory and some auto insurance agents question whether or not the new law will be effective.  The new law requires drivers to carry proof of insurance with them when they are driving and one policy card should be kept in the vehicle at all times.  If a driver is pulled over and has insurance, but cannot prove it with a policy card then they may face a ticket.

Some experts wonder if the fines are going to be enough of an incentive for them to purchase auto insurance.  With auto insurance rates for high risk drivers being relatively high, it may be cheaper for them to take the risk of not having insurance at all.  There hasn’t been a huge increase in Wisconsin drivers shopping for auto insurance.  People who would abide such law already have auto insurance because it’s the responsible thing to do since Wisconsin already mandates drivers to be responsible for an accident financially.

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.