With all of the money spent on TV advertising by auto insurers these days, you’d think that motor vehicle insurance is a commodity, and that all companies provide the same level of coverage. The advice to “only pay for what you need” is fine until there is an accident, and the real need becomes apparent. Actually, auto insurance can be quite complicated and insurers often seek to limit or deny coverage based on a person’s status as an “insured” under the policy, or numerous policy exclusions that may apply. Here are some of the basic coverages and issues.

“Liability” coverage protects the insured from liability to others for damages resulting from an accident arising out of the use of a motor vehicle. The insurer agrees to pay all sums an “insured” is legally liable to pay for bodily injury or property damage, up to the limits purchased by the insured. The insurer also has a duty to defend its insured against claims under the policy, a feature that is very valuable to the insured. An “insured” typically includes the named insured identified in the policy, his or her spouse, and other family members residing in the same household. The minimum liability limit in Wisconsin is $25,000, but such a low limit can expose the insured to significant personal liability. Higher limits can be purchased for a modest increase in premium. Make sure that all vehicles in the household are separately insured.

“Uninsured motorist” (UM) coverage protects an insured suffering injury. The insurer agrees to pay damages the insured is legally entitled to recover from the owner or operator of an “uninsured motor vehicle.” The term “insured” includes the named insured, household family members, and any other person occupying your insured car. UM coverage is required in Wisconsin with minimum limits of $25,000. Higher limits are reasonably priced and are strongly recommended. If you have multiple cars, you typically cannot “stack” multiple UM limits and are restricted to the limits under one policy or car. UM coverage is “personal and portable” and applies to a pedestrian injured by an uninsured motorist.

“Underinsured motorist” (UIM) coverage applies when the adverse driver is insured for liability but has limits that are less than the insured=s damages. The insured then seeks to recover under his or her own UIM coverage. Occupants of your insured car qualify as “insureds.” However, an “underinsured motor vehicle” is typically defined as a vehicle insured by a liability policy with limits less than the UIM limits of the insured=s own policy. So if you have UIM coverage with a limit of $100,000 and the adverse driver has liability coverage with a limit of $100,00, there is no UIM coverage. In addition, UIM coverage is subject to a reducing clause whereby the UIM limit is reduced by all amounts paid on the behalf of the adverse driver. So by definition, if you purchase UIM coverage with limits of $100,000, your insurer will never have to pay you $100,000. UIM coverage is not mandatory in Wisconsin but you should have it for your own protection. Again, higher limits are reasonably priced and are strongly recommended. Like UM coverage, UIM coverage is “personal and portable” and multiple policies cannot be “stacked.”

The Hale Skemp Firm has litigated numerous and complex insurance coverage issues through Wisconsin courts for many decades, both to maximize the client=s recovery and to make sure clients are properly covered, defended and indemnified. When faced with an insurance coverage issue of any type, our firm has the experience and expertise to make sure you are covered.

The information contained on this website is intended as an overview on subjects related to the practice of law. Each individual case is different, and laws do change, so please be aware that the circumstances and outcomes described may not apply to all cases and should not be interpreted as legal counsel. Please seek the advice of an attorney before making any decision related to legal issues.