March 27, 2009                                                                                   

Budget Drives Up Cost of Auto Insurance

The Governor of Wisconsin is often required to wear many hats.  It comes with the territory as the chief executive officer of the state and elected leader of more than five million people.  While there is perhaps no limit to the number of roles a Governor must play, Governor Doyle apparently has added one more to that list: insurance agent. 

As part of his recent state budget proposal, the Governor raises the minimum liability rates for the insurance coverage on your vehicle by 40 percent, which ultimately will cost you more money.  This proposal is yet another in the long list of non-fiscal policy items included in the 1,700 page budget bill, which is adding more controversy to an already controversial, and expensive, $63 billion state budget. 

At present, Wisconsin has one of the lowest auto insurance rates in the country, making it relatively affordable for nearly all vehicle owners.  However, that would change if this new rate hike passes with the budget.  Currently, the least amount of auto insurance coverage a motorist can purchase is $25,000 for each person injured in an accident, a cap of $50,000 per accident, and $10,000 to cover property damage. 

The budget proposal being considered increases those minimums to $100,000 for each person, $300,000 per accident, and $25,000 for property damage.  In the end, the state of Wisconsin would move from one of the lowest to one of the highest in the nation in terms of minimum auto insurance coverage. 

Supporters of this idea, such as the trial lawyers, argue that rates have remained at the current level for more than twenty years.  However, increasing rates – or other fees or taxes – solely because they have not been increased in many years is not a valid argument.  According to the Property Casualty Insurers Association of America, the current minimums cover more than 90 percent of auto accident injuries.  If the rates are increased, those who currently struggle to pay for the current minimum coverage may decide to drop their coverage entirely, leading to more uninsured drivers on the road. 

Though auto insurance costs affect home finances, they do not affect state finances.  For that reason, this item should not be included in the budget bill.  If this idea is worthy of consideration, it should be introduced as stand-alone legislation and debated on its merits in an open and public forum.  Tucking it away in a massive budget document and flying under the radar is not in the spirit of open government and transparency.  In addition, it is the role of the Legislative Branch, not the Executive Branch, to formulate public policy. 

Over the last few years, preceding budgets have increased taxes and fees on a number of items and services, costing Wisconsin residents and businesses hundreds of millions of dollars.  With the latest budget, the Governor seeks to increases taxes and fees by more than two billion dollars.  This proposal to mandate higher auto insurance coverage minimums will be one more crushing cost to the already high cost of living in Wisconsin.  The Governor does wear many hats; but if this provision and this budget are enacted, the people of Wisconsin may find themselves with their hats in hand. 

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Sen. Kedzie can be reached in Madison at P.O. Box 7882, Madison, WI 53707-7882 or by calling toll-free 1 (800) 578-1457.  He may be reached in the district at (262) 742-2025 or on-line at www.senatorkedzie.com