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As of November 1 in Wisconsin, there are new state laws affecting auto insurance policies issued for the first time or being renewed. The Wisconsin Association for Justice has provided a good overview of what this law means for consumers and, especially, how it might affect you if you are in an accident with someone who doesn’t have enough (or any) insurance.

Here are some of the things the new standards do:

  • Drivers now only have to carry $25,000 in liability coverage; $10,000 for property damage; and $25,000 for uninsured motorist coverage. Underinsured motorist coverage is no longer required.
  • The term “underinsured motor vehicle” used to be defined by a statute. Now, auto insurance companies themselves get to define what that means and thus when your underinsured coverage will kick in.
  • If you are in an accident with an underinsured motorist and you opted to carry underinsured motorist coverage, the auto insurance company can reduce your amount of coverage by the amount you received from other sources—such as the other driver’s insurance, workers’ compensation or disability benefits. The auto insurance company can also do this with uninsured motorist coverage.
  • Consumers with multiple insured vehicles used to be able to combine the coverage under their policies when necessary. This was called “stacking” and insurance companies are not required to permit it under the new law.
  • In order to receive coverage for accidents caused by "phantom" vehicle that runs you off the road and gets away, the insured must comply with special reporting requirements including having an independent witness, providing a statement to the insurance carrier within 72 hours, and reporting the accident to law enforcement – failure to jump through any one of these hoops may result in denial of coverage

The net effect of all of these changes is that consumers are getting less coverage and the auto insurance companies are getting more control. Victims of car accidents involving uninsured/underinsured motorists already had enough obstacles to recovery and these legal changes create more.

As a result, it is more important than ever now to know your insurance company’s policies and how they affect you. And when you’re out shopping for insurance, there are even more questions to ask to make sure you are getting the coverage you think is necessary. The Wisconsin Association for Justice put together a brochure to help consumers navigate this new legal landscape. It is definitely worth paying attention to.

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