Law Office Report - Spring 2009
New Rules Regarding Underinsured Motorist Coverage
and Personal Umbrella Policies
Underinsured motorist coverage is a driver’s best friend. It is estimated that 20% of the drivers in the state of Wisconsin have no liability insurance coverage or are inadequately covered for the damages they cause in automobile accidents. Current Wisconsin law does not require that a motorist carry liability insurance as a prerequisite for issuance of a driver’s license or registration of a vehicle. The law requires only that liability insurance currently issued provide a minimum limit of liability of $25,000 per person injured or $50,000 total coverage per accident, regardless of the number of claimants. Underinsured motorist coverage is intended to protect you from the consequences of being seriously injured by a motorist whose liability insurance coverage is inadequate to pay for your losses. Accordingly, underinsured motorist coverage becomes invaluable in the event you or a member of your family is seriously injured in an auto accident.
Recently, the Wisconsin Supreme Court added another opportunity for protection from an underinsured driver. In addition to the underinsured motorist coverage (UIM) which you have hopefully purchased in your auto liability policy, you now have the opportunity to include additional underinsured motorist coverage in any personal umbrella liability policy listing you as a named insured. Generally, and with respect to an auto accident situation, umbrella policies provide liability protection in excess of the limits provided in underlying auto liability coverage if you are determined to be at fault for causing an accident. This is certainly valuable protection, but since it only protects you from liability, an umbrella policy seldom provides additional coverage if you or a family member were injured by an underinsured driver. The Supreme Court made it clear, however, that statutes requiring notice of availability of UIM coverage in automobile liability policies also apply to personal umbrella policies. Thus, if you are currently insured under an umbrella policy, the insurer must provide notice to you that you are eligible to add additional UIM coverage to your umbrella policy.
It remains to be seen how the insurance industry will rate the cost of such coverage as loss experience in this situation is currently minimal. However, UIM coverage under automobile liability policies has been very cost effective and represents an extremely good value in terms of the protection it affords to an insured. It is likely that UIM coverage now available under personal umbrella policies will be quite affordable. Call your insurance agent and request a quote for the cost of adding underinsured motorist coverage to your current umbrella policy — it could well be the smartest money you ever spent.