Wisconsin car insurance, why is it important?
Wisconsin car insurance is necessary because every day there are nearly 200 car accidents on our roads. Car insurance protects us from accident claims against us but most important it protects us from bad drivers who cause car crashes. Two people each day are killed in Wisconsin car accidents and many disabled. In addition to death or disability, car accident injuries may be costly medical care, lost time from work, suffering, pain, and disfigurement. We buy “liability” car insurance to protect our assets for those instances where a driver in our home causes a car accident. More importantly though, our focus should be on protecting ourselves from the bad drivers.
What protects us from bad drivers?
The worst drivers: 1) have no car insurance or 2) don’t have enough car insurance. Such drivers typically have few assets and do not care about going bankrupt to avoid a legal judgment. In Wisconsin, to protect ourselves from those who do not have any liability car insurance, insurers sell “Uninsured Motorist Coverage” (“UM”). And to protect us from those who do not have enough liability car insurance, insurers sell “Underinsured Motorist Coverage” (“UIM”). We recommend to friends that they carry limits of at least $250,000 or more in liability, UM and UIM coverage. Unfortunately, with increased medical expenses and changes in Wisconsin law, limits of $100,000 are not enough. In fact, for many people it makes sense to have an umbrella with a UM/UIM rider for $1,000,000 or $2,000,000.
Why isn’t a $100,000 limit high enough?
Thanks to the insurance lobby in Wisconsin, the legislature gives insurance companies the benefit of our being wise enough to buy insurance. Thus, we need extra insurance to pay for this. Specifically, when resolving an injury claim, by settlement or judgment, the law generally allows health and car insurers to take some of your proceeds (via “subrogation” or “reimbursement” clauses) or to take credit for your receiving such proceeds (via “reducing” clauses). It seems very unfair, but this applies to nearly every injury claim.
Is it expensive to raise the policy limit?
Not very. Limits may often be raised substantially with a little increase in premium. Wisconsin’s Commissioner of Insurance notes that increasing limits 500% on a liability policy from 50/100 ($50,000 per person, $100,000 per accident) to 250/500 ($250,000 per person, $500,000 per accident), increases premiums just 20%. Note, the “per person” limit is most important.
What is “umbrella” insurance?
“Umbrella” insurance gives added protection, but should definitely a UM/UIM rider! You need to ask for this specifically. In Wisconsin, insurance agents often do not just offer this. When receiving the car insurance policy cover page (“declarations”), double-check to see those specific UM and UIM phrases in the umbrella policy. Wisconsin car insurance agents are not perfect and you must have this right. We highly recommend to friends that if they can afford the expense, typically about $500/year, that they should buy an umbrella with a UM/UIM rider for $1,000,000 or $2,000,000.
