This is part four of a four part series about Wisconsin insurance and common types of coverage.
To help you understand the most common coverages and make informed decisions about the coverage(s) you should have for yourself, here’s an explanation of how the different types of insurance coverage work to protect you.
Under Wisconsin law, are you required to have liability insurance? The answer depends on how you define “required.” Wisconsin drivers are not required to have proof of insurance to get a license or to drive a car. If you are pulled over by law enforcement and do not have proof of insurance, however, you can receive a traffic ticket for operating without insurance. Beyond that, if you cause an accident and are unable to make the injured party whole, either through insurance or your own assets, the Wisconsin Safety Responsibility Law will allow the Wisconsin Department of Transportation to suspend your driver’s license and vehicle registration until you make the injured party whole. Avoiding these penalties is one good reason to get liability insurance before an accident occurs.
How much insurance should you get? If you are one of the richest people in the world and can afford to pay a six-figure or seven-figure judgment without noticing it, then you may decide you do not need liability insurance and can instead pay any damages you may cause out of your own pocket. This is called “self-insurance.” For those of us who are not in a position to self-insure, my suggestion is that you decide how much insurance to buy after considering a few factors.
- Wisconsin’s minimum required liability limits are often inadequate. Wisconsin law requires that any liability policy issued in Wisconsin must provide minimum liability coverage of at least $25,000 per person and $50,000 per accident. Because those minimum limits are often insufficient to cover permanent injuries, however, the question of whether you should increase your coverage above the minimum limits depends on your comfort level with a few other factors.
- How would you feel about injuring someone in an accident and not having the ability to make the person whole, or if someone riding in your vehicle were injured by an uninsured or underinsured motorist and you lacked sufficient coverage to make them whole? Most of us feel an obligation to make things right when we do wrong by someone. In the auto accident context, this means that if anyone is injured in an accident we caused, we want to make that person whole. It also means that if anyone is injured in an accident while occupying our vehicle, we want them to be made whole, too, even if the accident wasn’t our fault. Because your ability to make an injured party whole only increases with each dollar of coverage you get for liability coverage, uninsured motorist coverage, underinsured motorist coverage, and med pay coverage, these are important factors to consider in deciding how much insurance to get above Wisconsin’s minimum limits.
- What assets do you need to protect, and how concerned are you about protecting them? If you have a significantly positive net worth, you will regret not having enough insurance to protect it if you should cause an accident. If you have a significantly negative net worth, you may have less concern that an injured party might be able to collect assets from you, but you may also have concern that an excess judgment could force you to file bankruptcy, resulting in serious long-term negative financial consequences on top of any guilt you might otherwise feel for injuring someone without making them whole.
- How much insurance can you comfortably afford? This factor is self-explanatory. If you can comfortably afford to pay for more liability coverage, uninsured motorist coverage, underinsured motorist coverage, and umbrella coverage than you have today, then my recommendation is that you increase your limits to whatever you can comfortably afford, regardless of where your limits may be today. I have worked on countless injury cases in which drivers regretted not having more insurance in place, and have never worked on an injury case in which someone regretted having “too much” insurance in place.
If you have any questions regarding the above, please do not hesitate to contact the personal injury team at Brennan Steil, S.C. We are happy to help and here to serve.
About the Author
A shareholder and managing partner of Brennan Steil S.C., Duffy is a litigator whose practice focuses on personal injury matters, insurance defense, business disputes, and employment law. Learn more.