To ensure you and your family have proper auto insurance policies in place to protect you in the event of an accident, here are a few tips for you to consider when reviewing your current auto insurance policies.
First, did you know that underinsured motorist (UM) and uninsured motorist (UIM) coverage is usually not part of an umbrella policy unless you obtain a separate rider? When obtaining an umbrella policy, be certain it contains UM and UIM coverage because these policies protect you and your family in the event you’re injured by a negligent driver with low — or no — coverage.
Second, in Wisconsin the law allows auto insurance companies to have “anti-stacking” provisions in your automobile insurance — the insurance companies limit the coverage and compensation you receive to just one policy. If you have three cars in your household, and you pay three different premiums for the three policies, the anti-stacking provision does not allow you to add the multiple policies together. In the event of an accident, the insurance company will limit the proceeds you receive to just one policy.
In a previous blog, we discussed reducing clauses that allow insurance companies to limit the UIM compensation you receive. When you combine reducing clauses and anti-stacking provisions in an insurance policy, the effects can be devastating. Let’s say you are in an accident and have $800,000 in medical expenses and receive $150,000 from the liability-insurance policy of the negligent driver. You also have a $200,000 UIM policy for both of your vehicles. Because you received the $150,000 from the at-fault driver, you will only receive an additional $50,000 from your policy because of the reducing policy ($200,000 UIM policy – $150,000 received = $50,000 from your policy). Because of the anti-stacking policy, you are not allowed to combine the coverage for your two policies for $400,000 of coverage. Prior to the 2011 changes in auto insurance law (which now allow insurance companies to utilize anti-stacking provisions and reducing clauses), you would have received $150,000 from the at-fault driver, plus $400,000 from your combined UIM policies — providing you with significantly more funds to cover your $800,000 medical bills.
Thus, when meeting with your agent, closely review the policy to ensure that you do have UM and UIM riders on your umbrella coverage, and choose coverage amounts that will provide you with ample coverage given the anti-stacking and reducing clauses.
