FOR MORE INFORMATION: CONTACT: LUTHER OLSEN (800) 991-5541

July 24, 2009

STATE BUDGET REQUIRES AUTO INSURANCE FOR ALL

In my last column I explained the budget provisions regarding illegal immigrants – both the part that became law and the part that did not.  This week, I am going to focus on another provision of the budget that concerns all drivers – a new mandate for automobile insurance.  Since the 1970s, people have been arguing about whether or not to require drivers to have car insurance. 

Starting in July 2010, all drivers will be required to have liability coverage so that if they are in an accident and are found to be at fault, the injured parties can make a claim against their insurance.  Current estimates put the percentage of uninsured motorists in Wisconsin at fifteen percent, while the national average is close to fourteen percent.  Some reports of the damages caused by uninsured motorists in 2006 indicate that uninsured motorists were in 8000 accidents causing 78 deaths and more than $35 million in unpaid medical bills. 

New Hampshire is now the only state in the nation which does not require insurance.

The budget also increases the minimum amount of insurance a person must carry from $100, where it has been since 1982, to $50,000 for injuries to a person, $15,000 for property damage and $100,000 for all injuries in an accident.  According to insurance industry representatives, about 80 percent of motorists carry insurance at these levels.  These figures will be readjusted every five years after 2017.

The new requirement for auto insurance will be enforced when people are pulled over for a traffic violation.  Drivers who are not insured will face a fine of $500, while drivers who are pulled over and cannot present proof of insurance will face a $10 fine.  Even the $500 fine might not be enough to compel a driver to buy auto insurance.  As we see with people who drive after their license has been revoked or without a license at all, some people drive even when they are not permitted because they need to get to work or see driving as a right and not a privilege.  Also, some people cannot afford insurance. 

Law enforcement officers will not be permitted to pull motorists over simply because they suspect they do not have car insurance.  This is called secondary enforcement of the law.  Primary enforcement would allow motorists to be stopped on the suspicion that they do not have insurance.  The concern with secondary enforcement is that motorists might not be convinced that they need to purchase auto insurance because they believe they can follow traffic laws and will not be stopped. 

The increased requirements for auto insurance may raise rates for automobile insurance as much as 40%, which might discourage people from purchasing insurance, in spite of the new law.  Supporters of the provisions argue that if someone is going to drive they ought to show that they can take financial responsibility for an accident or injury that they cause. 

If you have any questions about any of the information I have included or if you have suggestions on other topics or issues you would like learn more about, you may call my office toll-free at (800) 991-5541; write me at P.O. Box 7882, Madison, WI  53708; or e-mail me at: Sen.Olsen@legis.state.wi.us. You can also sign up for our newsletter at our website: http://www.senatorolsen.com.