Wisconsin is a mandatory car insurance state. This means that every Wisconsin resident who operates a motor vehicle must have and maintain a personal auto insurance policy that adheres to the State’s rules for minimum coverage. In Wisconsin, drivers are required to have a minimum of $25,000 in automobile liability coverage to cover injury or death to one person, and $50,000 to cover injuries or deaths to more than one person resulting from a single accident. In addition, drivers must have a minimum of at least $10,000 for property damage resulting from a single accident. Drivers, of course, may purchase additional coverage beyond the minimum requirements. In fact, in most accident cases, a driver who only has the minimum amount of insurance required by law will not have sufficient insurance coverage to cover all of the resulting damages caused by an accident. If a driver causes a car accident that results in damages in excess of his or her coverage limits under his or her policy, that does not mean that he or she is “off the hook” for the amount of damages that exceed the policy limits. What it means is that the driver is personally responsible for the additional damages that exceed the amount of his or her insurance coverage.
All drivers should bear in mind that a minimum policy may not be enough to cover a serious accident. It is up to every driver to ensure that they amount of insurance coverage they purchase offers a comfortable level of coverage in case of an accident.
Fault-Based Insurance Coverage
Most U.S. states follow fault-based laws for handling car accidents. If a car accident happens, the driver at fault for causing the accident bears liability for the resulting damages. Some accidents may involve comparative negligence or shared fault, and those cases will need to operate under state comparative or contributory negligence laws to determine fault and liability for damages.
Generally, a fault-based insurance policy includes three basic forms of coverage:
- Bodily injury coverage for a single person injured or killed in an accident the policyholder caused.
- Total accident or per occurrence coverage for multiple injuries or deaths resulting from a single accident the policyholder caused.
- Property damage liability coverage for vehicle and personal property repair and replacement costs resulting from an accident the policyholder caused.
No-Fault Insurance
Some states follow no-fault insurance laws for car accidents, and drivers must purchase and maintain Personal Injury Protection coverage to pay for their damages in an accident regardless of who caused the accident. No-fault insurance states generally uphold laws including the minimum amount of Personal Injury Protection a driver must carry and the conditions under which an injured driver may take legal action beyond an insurance claim.
Most states that follow no-fault laws for car accidents set rules for when a driver may or may not take legal action against an at-fault driver. Generally, these provisions apply to severe injuries such as bone fractures, head injuries, any injury requiring hospitalization, or any injury resulting in permanent damage or disability.
Uninsured and Underinsured Motorist Coverage
Wisconsin law also requires drivers to purchase at least $25,000 in uninsured motorist (UM) coverage. This coverage is designed to protect you in the event you are involved in a crash caused by the fault of another driver who does not have automobile insurance, in violation of the law’s requirement to have such insurance. In such crashes involving uninsured motorists, your own insurance company pays for the damages caused by the at-fault uninsured driver. Just as with the minimum requirement for liability insurance, you can purchase additional UM coverage beyond the minimum $25,000, and we recommend that you do so. If you are seriously injured in an accident caused by an uninsured motorist and only have the minimum $25,000 in UM coverage, that will not be sufficient to fully compensate you for all of your damages. While in theory you could attempt to pursue a claim against the uninsured motorist personally for your damages, it is difficult to collect on personal judgments. Typically, when an at-fault driver is uninsured, he or she is of limited financial means, and there are no meaningful assets or real or personal property to seek to go after to collect on any personal judgment. In addition, most personal injury judgments against individuals are dischargeable in bankruptcy, so the uninsured driver could always file for bankruptcy to get any personal judgment discharged. For these reasons, we recommend that you purchase as much UM coverage as you can reasonably afford. Typically, the annual premium for UM coverage is very modest and affordable, even at high amounts such as $300,000 or $500,000.
Underinsured motorist (UIM) coverage is optional under Wisconsin law, but it is coverage that you should purchase. This coverage is designed to protect you in the event you are involved in a crash caused by the fault of another driver who has insurance, but those insurance coverage limits are not sufficient to cover all of your resulting damages. If you have purchased such optional coverage, your insurance company may pay additional compensation to you after the at-fault driver’s insurance company has paid out its policy limits. In connection with UIM coverage, most policies define an underinsured motor vehicle as one which is covered by a policy of liability insurance, but the limits of which are less than the amount of your UIM coverage limits. For example, if the at-fault driver has $100,000 in liability coverage, and you have $100,000 in UIM coverage, and your total damages from a crash exceed $200,000, most people would think that they should get the at-fault driver’s $100,000 policy limits, and then also get their own $100,000 UIM policy limits, for a total of $200,000. However, under the standard definition of underinsured motor vehicle, your insurance company would owe you nothing, because the at-fault driver’s $100,000 liability limits are equal to your $100,000 UIM limits, not less than those limits.
In addition, most UIM policies contain a reducing clause which allows the UIM limits to be reduced “dollar-for-dollar” by the amount of the at-fault driver’s limits. For example, if the at-fault driver has $100,000 in liability limits, and you have $300,000 in UIM limits, and total damages of $500,000, you will not receive the full $300,000 from your own insurance company but rather only $200,000, because the $300,000 UIM limits will be reduced by the at-fault driver’s $100,000 liability limits.
For these reasons, when purchasing UIM coverage under your own policy, you should make sure to purchase it in a high enough amount to protect you against financial hardship in the event you are seriously hurt in a car crash by a driver who may be inadequately insured. As with UM coverage, we recommend that you purchase as much coverage as you can reasonably afford. The premiums for UIM coverage are also usually quite affordable, even at higher amounts of $300,000 or $500,000.
Medical Payments Coverage
Medical payments coverage is also optional coverage but coverage that most people should purchase. This coverage is available to pay medical bills that you or a passenger in your vehicle incur because of a car accident. Most individuals’ health insurance policies require annual deductibles and/or co-payments for medical treatment, so medical bills incurred as a result of a car crash are not fully covered by health insurance. Medical payments coverage also typically covers funeral and burial expenses in the event you or a passenger in your vehicle is killed as a result of a car crash.
Umbrella policies.
Umbrella policies provide additional coverage over-and-above the amount of underlying insurance coverage that you may have. These policies typically provide additional coverage in the amount of at least $1,000,000 on top of the underlying coverage available under an underlying automobile liability policy. Umbrella policies may also provide additional or excess UM or UIM coverage as well. Many people think that because they have an umbrella policy, it includes UM and UIM coverage, but this is not always the case. Some insurance companies do not offer additional UM or UIM coverage under umbrella policies. When purchasing an umbrella policy, it is therefore critically important to make sure and verify whether the umbrella coverage is limited to only liability coverage, or also provides additional UM and UIM coverage.