Summary of Auto Insurance Coverages in Wisconsin
There are many different types of automobile insurance, this guide will summarize those coverages and how each of them come into play after an automobile accident.
Liability CoverageLiability coverage is the type of insurance most people think about when they hear, auto insurance. This covers you in the event you cause an accident. In Wisconsin, you are required to purchase liability coverage if you are operating a motor vehicle.
Typically, these policies will provide either single limit or split limit coverage. For a single limit policy, for example, if you purchase a limit of $100,000, the most your insurance company will pay to others hurt in the accident is $100,000, regardless of how many people are injured. A split limit policy such as a $50,000/$100,000 policy, creates two limits, the first being a per person limit, the second being a per accident limit. In this example, the most the insurance company will pay per person is $50,000 and the most they will pay per accident, regardless of the number of people hurt, is $100,000.
When purchasing liability coverage it can be tempting to save a few dollars by selecting a lower limit. You should beware though, medical bills add up quickly after car accidents and many accidents result in damages well in excess of the low limits required by law.
Uninsured MotoristUninsured Motorist Coverage covers you in the event you are hurt by a driver who does not have liability insurance. This coverage essentially steps in and provides liability coverage to the uninsured driver. That is, if you purchase this policy with limits of $50,000/$100,000 as mentioned above, and you are hurt by an uninsured driver, you will have coverage up to the per person/per accident limit.
This coverage is mandatory in Wisconsin.
Underinsured MotoristUnderinsured Motorist coverage is similar to uninsured, in that your own auto insurance company will be providing coverage. However, unlike Liability and Uninsured coverage, Underinsured is not mandatory, though it is extremely wise to purchase.
Underinsured coverage provides extra insurance coverage when the at-fault driver does not have enough insurance to cover the damages. For example, if you incur $100,000 in damages as a result of an accident, but the at-fault driver only has $50,000 in coverage, you would make an underinsured claim with your own insurance company for the remaining $50,000. Importantly, for Underinsured coverage to apply, the limit of the Underinsured policy must be higher than the underlying liability policy. That is, if the at-fault driver has a $50,000 policy and you have a $50,000 underinsured policy, your underinsured policy can claim a credit for the liability policy payment and reduce its limits to zero.
Accordingly, you should always pay the few extra dollars on your premium to ensure you have adequate underinsured coverage.
Property Damage/CollisionThis coverage is straight forward, it covers damage to your vehicle. There are several new products being offered. In purchasing this coverage, you should consider the age and value of your vehicle and what the policy actually covers. Many times, people are surprised to find out the check for their totaled car isn't enough to purchase a replacement. This is because many policies provide for the fair market value of the vehicle, not replacement value. Look into these coverages before purchasing.
Medical PaymentsThis coverage pays for medical bills incurred as a result of an automobile accident. Policies have different limits just like the coverages above. One thing to consider when purchasing medical payments coverage is whether you have private health insurance and what your deductible is. Typically, if you have private health insurance, it is a good idea to purchase medical payments coverage just up to your deductible so you can limit out-of-pocket expenses in the event of an accident before triggering broader coverage under your private health insurance.