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9/28/2009
Huebsch: Auto insurance rate hikes on the way
Your automobile insurance premiums are going up. It doesn’t matter that you have a spotless driving record, excellent credit, automatic seat belts, anti-lock breaks and airbags, that you shunned a sports car in favor of your father’s sedan, and that you haven’t submitted any claims. They are still going up.
The first increase is coming in five weeks, on November 1st. Look for a second increase on New Years Day, 2010 and a third on January 1, 2017. Expect others long before 2017 because Democrat lawmakers have already signaled that more are on the way.
If you’ve already heard the bad news from your insurance company, you also likely heard that the state legislature is to blame. While there’s truth in that statement, it doesn’t tell the full story.
At the root of these premium hikes are laws Governor Doyle proposed in his 2009 state budget. Democrat majorities in the state Assembly and state Senate revised and expanded the governor’s proposals before he signed them into law at the end of June.
In its customary review of governor’s budget, the non-partisan Legislative Fiscal Bureau (LFB) identified the insurance proposals as non-fiscal policy unrelated to state finances. I and many of my Republican colleagues warned that these changes would raise automobile insurance rates and urged their removal from the budget. We introduced an amendment to strip them from the bill, but Democrats voted it down. Secure in the knowledge that they didn’t need a single Republican vote to pass the budget, Governor Doyle and Democrat lawmakers plowed ahead with plans to force car owners to buy insurance and up their coverage.
November 1, 2009
In Wisconsin, automobile owners can purchase “uninsured motorist coverage” to cover bodily injuries that are caused by a driver without insurance or that are sustained in a hit and run accident. Today, the minimum uninsured motorist coverage available is $25,000 per person and $50,000 per accident. In November, the new state law increases these minimums by 300% to $100,000 per person and by 500% to $300,000 per accident.
Car owners can also purchase underinsured motorist coverage to supplement another driver’s coverage for bodily injuries. Beginning November 1st, you must purchase it and purchase more of it. The minimum coverage increases from $50,000 to $100,000 per person and from $100,000 to $300,000 per accident.
Insurance policies also provide coverage of medical bills for injuries sustained in a car accident. The required minimum coverage is increased from $1,000 to $10,000 per person. Motorcyclists could see their premiums increase up to 550% due to this change.
The new law also allows the stacking of uninsured and underinsured motorist coverage, which means personal injury lawyers can tap into insurance policies on cars that weren’t involved in an accident. In other words, if you have two cars with $500,000 of insurance on each, but only one is involved in an accident, you could still be liable for $1 million in damages.
January 1, 2010
On January 1, 2010 automobile owners must purchase double the current amount of coverage for bodily injury and 50% more for property damage sustained in accidents with other insured drivers. Minimum coverage increases from $25,000 to $50,000 per person and $50,000 to $100,000 per accident for bodily injury. Property damage coverage rises from $10,000 to $15,000. After 2016, the minimums will increase every five years based on the consumer price index.
June 1, 2010
Today, drivers aren’t required to purchase automobile insurance. That changes on June 10, 2010 when everyone owning a car must have insurance. Failure to comply means a $500 fine. According to the Wisconsin Insurance Alliance, all of the new mandates will increase premiums by at least 33%. For some, the impending premium increases could be the difference between carrying car insurance or not. Telling people they have to buy insurance while simultaneously making it cost prohibitive creates a whole new set of problems.
These new laws should have never been included in the state budget, but because they were, most Wisconsin families never saw the insurance rate hikes coming. The public was intentionally kept in the dark and input was limited. Public hearings weren’t held on the proposals and there’s no roll call vote against which to hold lawmakers accountable – the changes were just a few of the thousands of issues decided by a single vote on the state budget.
Supporters of the insurance law changes who contacted my office were almost exclusively Dane County personal injury lawyers. The more bodily injury insurance coverage you have, the more lucrative the settlement for them. For Governor Doyle and the Democrats, helping Wisconsin families through the recession took a back seat to the wants of trial lawyers who contribute heavily to their campaigns.
The final chapter has yet to be written with Milwaukee Democrats announcing plans to revive another budget provision vetoed by Governor Doyle. The proposal prohibits insurers from considering locations when setting rates. That means they couldn’t charge higher premiums in areas where there are more thefts, vandalism and accidents.
If this becomes law, insurance companies would charge drivers in western Wisconsin more and then redistribute those premiums to drivers in southeastern Wisconsin. Rep. Leon Young (D-Milwaukee) told the Milwaukee Journal Sentinel that it’s only fair to spread the risk around because “you make us in Milwaukee have a higher premium than people outside of Milwaukee.” “Quite frankly, if you spread it out, would it not be fairer?” he asked.
Governor Doyle didn’t think so. In his July veto message, he said the provision was “disruptive to the market and would increase premiums for policyholders in many locations.” He directed the Commissioner of Insurance to study the issue “to ensure fair treatment of citizens throughout the state.” Hopefully, the governor will stick to his guns if he finds the proposal on his desk for a second time. But, even that is too little too late for the families who have to add a new bill to the pile they are already struggling to pay.
Mike Huebsch is a Republican and represents the residents of the 94th Assembly District.
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