November 5, 2009
Leibham Bill Would Roll Back Auto Insurance Changes
Legislation seeks to stop mandates that were approved in fiscal budget
STATE CAPITOL — Auto insurance consumers are seeing their rates rise by as much as 40 percent as a result of major non-fiscal insurance policy changes that were stuffed into the recent state fiscal budget. In response, State Senator Joe Leibham (R–Sheboygan) has co-authored legislation that seeks to repeal most of the changes so they can be considered as separate legislative bills.
Specifically, Senator Leibham’s proposal will repeal the non-fiscal budget provisions that:
- Increased the mandatory minimum amounts of liability coverage;
- Increased the mandatory minimum amounts of uninsured driver coverage;
- Mandated coverage for underinsured drivers; and
- Allowed for the “stacking” of up to three auto insurance policies.
Analysts have estimated that, under these new laws, Wisconsin drivers will go from having among the lowest auto insurance rates in the nation to having among the highest. For drivers, this could amount to premium increases of as much as 40 percent.
Senator Leibham opposes the measures due to the additional financial burdens that they will place on drivers that are trying to be responsible. “Drivers, small businesses and families across the Lakeshore Area are already struggling to pay their bills,” said Senator Leibham. “Why the legislature would mandate these new insurance costs at this tough economic time makes no sense to me.”
Senator Leibham also warned that making auto insurance unaffordable to more drivers could cause unintended consequences. Rising premiums mean that more people may risk driving without insurance – despite the new law requiring it. The result will be fewer drivers with insurance, and that will lead to greater exposure and risk for insurers who will ultimately be forced to increase rates even more.
The Senator’s bill will not repeal the new requirement that anyone who operates a vehicle in Wisconsin maintain automobile insurance.
In addition, Senator Leibham strongly opposed the process in which the changes were approved. “These extensive and expensive mandates should never have been debated and approved as a part of the state budget. Each of them received little, if any, consideration,” said Senator Leibham. “I would argue that most legislators who voted for the budget still don’t realize what they voted for, if these changes were necessary or what impact these revisions will have on insurance rates. One of the major reasons why I am seeking to repeal these new mandates is because they should first receive open and honest consideration.”