The dirty little secret of an auto insurance rollback

Written by Andrew Freiburghouse and Gary Bangstad on May 2, 2011 & Posted in Auto Insurance

Wisconsin reduced the minimum liability limits in an effort to reduce the cost to consumers. Were the savings worth the risks? How much did the average consumer save? Auto insurance professional Ryan Hurlbert tells you when low is too low.

In recognition of the increases in health care cost for accident victims and the inadequacy of the state minimum auto liability insurance mandate, Wisconsin raised the minimum coverage requirements in 2009.Two years later, they reduced them again in a misguided effort to make auto liability insurance more affordable.

Prior to 2009 in Wisconsin, a motorist only had to carry bodily injury liability in the amount of $25,000 per person, $50,000 per accident, and property damage liability of only $10,000. In 2009, the Legislature recognized the inadequacy of these minimum auto insurance liability limits and increased them to $50,000 per person, $100,000 per accident for bodily injury and $15,000 for property damage.

On March 8, Representative John Nygren successfully led the effort to return the mandates to the pre-2009 levels. "It's about consumer choice," Nygren said. The bill was passed under the guise of reducing auto insurance costs.

Setting the stage for disaster

But just how much will the average person save on their auto insurance? Will the savings be enough to off-set the number of medical bills that go unpaid? Who will pick up the tab for medical procedures when the insurance limit is reached, but the bills keep coming? These questions remain unanswered.

There is a small safety net- the minimum uninsured/underinsured motorist coverage allowed is $50,000 per person $100,000 per accident. This seems silly. By law, you can carry stupidly low bodily injury liability limits, but by that same law you have to protect yourself against those stupidly low liability limits with a higher minimum uninsured/underinsured coverage limit. This shifts the responsibility for paying for injuries from the at-fault driver's policy to the victim's car insurance company.

Does shifting the costs like this make sense? Ultimately it will drive up the cost of the uninsured/underinsured coverage, off-setting some of the savings achieved by lowering the liability limits. If you really want to save money by getting the cheapest car insurance, shop around. Auto insurance premiums vary greatly, and you could end up saving hundreds of dollars.

About the Author

Andrew Freiburghouse is a writer and businessman. As a partner at Los Angeles tax preparation firm Pronto Income Tax of California, Inc., Andrew has served thousands of clients both face to face and over the telephone. Currently, Andrew lives in Brooklyn, NY, and is in the process of starting up his own tax practice.

Gary P. Bangstad, Ed. D. is a freelance writer in the area of business and insurance. Previously, he worked for Midwest Financial Planning LTD, selling insurance and investment products. He has also taught music at the university level.

SHARE THIS STORY

Featured Auto Insurance Companies

Insurify™️ - Virginia Drivers Can Save Up to 50%

  • The easiest way to compare 20 real quotes from top brands
  • Prices starting from $29/mo
  • Trusted by more than 4 million drivers - 4.9 star reviews
  • As seen on Fox News, WSJ, Forbes, Fortune Magazine

Ask Our Expert

View All

Q. Will my policy pay off my car loan if my car is totaled?
A. An explanation of what happens if your car is totaled out when you still owe money on your car loan or lease. Read More

Q. Will car insurance cover my stolen personal items?
A. If someone steals personal items from your car, will car insurance cover those items? Read More

SHARE YOUR THOUGHTS

Required parameter not set.
Request a Quote for:
Go

Recent Insurance Stories

View All
Simple ways to save on car insurance
If you can put in a little time to review your car insurance policy, it's possible to save hundreds, or more, on your annual auto insurance premium. Comparison shop. The No. 1 way to obtain cheap car insurance rates is to compare car insurance Read More...
  • How car insurance liability limits work
  • Road trips and car insurance
  • Uninsured motorist: What is it good for?
  • What covers car for storm damage?
  • Featured Auto Insurance Companies

    Cheap Auto Insurance - Save up to 40%

    • Top Rated Insurance Companies
    • Bundle Home & Auto for additional savings
    • Save up to 40%
    • Get Started Now!