Insurance is based on the theory that most drivers will not be involved in accidents. Premiums paid by all drivers during the year are used to pay for losses of the few drivers who have accidents. When you buy insurance, you receive financial protection in case you become involved in an accident. You also make sure a person injured through your fault will recover for losses you cause.
For example, if you are in an auto accident, you may be found responsible for losses of other people involved. A claim may be made or a lawsuit led against you, and you may not only have to pay for property damage but also for medical expenses, lost wages, and pain and suffering of any injured person. The amount of money you may have to pay could be substantial.
If you do not have insurance, anything of value you own, including your home, savings, future wages, and other assets, may be taken to pay for those losses. Auto liability insurance can help protect you so this does not happen. Liability insurance also pays for an attorney to defend you against any claim or lawsuit that may be payable under the policy.
You can also buy insurance to cover damages to your auto. This optional coverage will help pay for your losses whether or not you were at fault.
There are many components of auto insurance including mandatory and optional coverage. Your policy must contain three major parts—liability insurance for bodily injury, liability insurance for property damage, and uninsured motorist coverage. Optional coverage includes underinsured motorist, medical expense coverage, collision and comprehensive coverage.
While many components of auto insurance have changed over the years the requirement that all drivers have motor vehicle liability insurance remains mandatory. This requirement falls under the purview of the Department of Trans- portation, Division of Motor Vehicles (DMV).
Wisconsin drivers are required to have an automobile insurance policy in force or, in limited situations, other security which could be a surety bond, personal funds, or certificate of self-insurance. Details are available from the Department of Transportation (wisconsindot.gov/Page/dmv/license-drvs/susp-or-rvkd/proof-of-insurance.aspx).
Your policy must provide at least the following minimum liability coverage:
When referring to liability limits, the insurance industry uses an abbreviation. The designation of $50,000/$100,000/$15,000 (or 50/100/15) or similar designations refer to the maximum amounts that an insurer will pay for three basic liability coverages. The rst number ($50,000) refers to the limit on bodily injury payments coverage per person. The second number ($100,000) refers to the limit on bodily injury coverage per accident where two or more people have been injured. The third number ($15,000) refers to the limit on property damage coverage per accident.
This does not protect you or your car directly. If you cause an accident injuring other people, it protects you against their claims up to the stated amounts for medical expenses, lost wages, pain and suffering, and other losses. It will also usually pay if the accident was caused by a member of your family living with you or a person using your auto with your consent.
This pays for damage you cause to the property of others such as a crushed fender, broken glass, or a damaged wall or fence. Your insurance will pay for this damage if you were driving your auto or if it was being driven by another person with your consent. Property damage liability also pays if you damage government property like a light pole or signpost, up to the limit you choose.
Uninsured motorist coverage applies to bodily injury you, your family, and other occupants of your vehicle incur when hit by an uninsured motorist or a hit-and-run driver. It also covers you and your family if injured as a pedestrian when struck by an uninsured motorist or a hit-and-run driver. It protects you by making sure money is available to pay for your injuries caused by someone else. The minimum amount of coverage required by law is $25,000/$50,000 for bodily injury only. These coverages are the minimum required by law; you may want to purchase more than minimum coverage required by law if you feel the need for more protection. Uninsured motorist coverage does not cover your property damage and does not protect the other driver. Your insurer may sue the other driver for any money your insurer pays you because of the other driver’s negligence.
Underinsured motorists (UIM) coverage increases the bodily injury protection to you and the people in your car up to the amount of coverage you purchase if the at-fault party’s bodily injury liability insurance limits are lower than your UIM coverage limits.
Underinsured motorist coverage is not mandatory. The insurer must notify you with the delivery of your policy that UIM coverage is available. You may reject buying UIM coverage. However, if purchased, coverage limits of at least $50,000 per person and $100,000 per accident are required.
You should carefully review your policy to determine exactly what coverage is provided by UIM.
If you are not sure what your coverage needs are, have insufficient coverage or simply don't know what your coverage is at all and would like to schedule a free consultation, please contact us at 608-222-4555 to schedule an appointment.