When $100,000 is not $100,000 – Understanding Underinsured Motorist Limits in Wisconsin

When $100,000 is not $100,000 – Understanding Underinsured Motorist Limits in Wisconsin

Any regular reader of our newsletter, or attendee of our seminars, has heard the repeated importance about having enough underinsured motorist coverage (UIM) to protect yourself if you’re injured in an auto collision.  UIM coverage provides a pot of money to compensate you for injuries sustained in a crash if the at-fault driver does not have enough insurance to fully compensate you for your injuries.  In other words, once the at‑fault liability insurer pays its policy limit, your own insurance company steps into their shoes with its underinsured motorist coverage to pay you for any remaining uncompensated damages.

Unlike liability coverage or uninsured motorist coverage, a Wisconsin driver is not required by law to have underinsured motorist coverage.  However, if accepted (and you should), the lowest limit that can be provided is $50,000 per person / $100,000 per accident.  Considering the extremely low cost of UIM coverage, we strongly encourage that drivers get as high of limits as possible.  For example, my personal auto policy has $500,000 per person UIM coverage and it costs $26 per year.  Having sufficient UIM coverage is especially important in light of the fact that whatever your UIM policy limit, whether it is $50,000 or $500,000, is a dollar amount that you will never be able to recover the amount from your insurance company.

Current Wisconsin law allows insurers to define underinsured motorist by a “limits to limits” comparison.  The result is you will only be eligible for UIM coverage if your UIM policy limit is greater than the at-fault liability policy limit.  Similarly, current Wisconsin law allows insurers to reduce what it has to pay under its UIM coverage by whatever is recovered from the at-fault driver and his or her insurance company, often called a “reducing clause.”  This combination means no Wisconsin driver can actually recover the dollar amount of the UIM he or she purchased.

Hopefully, an example will help.  Joe is severely injured in a car wreck.  The at-fault driver has a $100,000 liability policy limit that the insurance company pays out to Joe.  This payment from the liability insurer does not fully compensate Joe for his injuries, and he turns to his own insurance company, with whom he has a $100,000 UIM policy.  Unfortunately, because both the liability insurance and UIM insurance have the same limit, $100,000, it means that there isn’t actually any underinsured motorist coverage available to Joe.  Because of the limits to limits comparison, only when the UIM policy limit is higher than the liability policy limit would Joe’s UIM coverage kick in.

To illustrate the reducing clause, lets change the above example to say that Joe has $250,000 in UIM coverage.  The at-fault insurance company still pays its $100,000 to Joe.  Now, because the $250,000 UIM limit is higher than the $100,000 liability limit, Joe is entitled to UIM coverage under his policy.  However, he is not entitled to $250,000 in UIM; instead he is only entitled to $150,000 because of the reducing clause ($250,000 – $100,000 = $150,000).

Regardless of what your policy says the UIM limit is, by virtue of the limits to limits comparison definition of underinsured motorist and reducing clauses, no Wisconsin driver actually knows how much UIM he or she will have available until after the accident and after he or she knows how much liability insurance the at-fault driver has.  As such, when you hear me or my colleagues harping about having plenty of UIM coverage, it is because if you have low limits of UIM, there is a good chance you will never get to use it, and if you do end up using it, it will always be less than the dollar amount you purchased.

 

Don’t Get Burned by “Fire” Insurance’s 12-month Statute of Limitation

Don’t Get Burned by “Fire” Insurance’s 12-month Statute of Limitation

If you were trying to get yourself to sleep by perusing the Wisconsin Statutes on Insurance Contracts, you may run across Wis. Stat. § 631.83(1)(a) – statutory periods of limitation on fire insurance.  The section states: “An action on a fire insurance policy must be commenced within 12 months after the inception of the loss.  This rule also applies to riders or endorsements attached to a fire insurance policy covering loss or damage to property or to the use of or income from property from any cause, and to separate windstorm or hail insurance policies.”  This is a sneaky statute that can have huge implications for homeowners and should be known by all.

First, “fire insurance” means a whole lot more than just “fire.”  In fact, Wisconsin courts have said that “fire insurance” is merely a “generic term” that “covers indemnity insurance for losses to property caused by many other perils than fire.”  Villa Clement, Inc. v. Nat’l Union Fire Ins. Co., 120 Wis. 2d 140 (Ct. App. 1984).  “Fire insurance” is broad enough to include perils such as fire, lightning, hail, tornado and even theft.  Considering the many possible causes of property damage that have nothing to do with actual fire, it is crucial to know that this 12-month statute of limitation applies “to any suit to recover for loss from any peril covered by the policy.”  Id. at 145-46.

Second, fire insurance’s statutory limitation of 12 months is much shorter than many commonly known statutes of limitation in Wisconsin, such as three years for most negligence actions or six years for most contract disputes.  Also, the limitation is 12 months “after the inception of the loss,” not the discovery of the loss.  Wisconsin courts have ruled that “inception of the loss” unambiguously means the date on which the loss occurs.  It does not matter when the owner-insureds discover the damage.  In other words, it is the date of the storm that is important, not the date you discovered the hail damage.

As such, if you are unable to reach an agreement with your insurance company on your property damage, it is crucial to act fast, getting counsel or filing suit yourself, to avoid having your claim completely time-barred by this sneaky 12‑month cutoff.

 

U.S. Department of Labor and IRS Extend COBRA Deadlines

U.S. Department of Labor and IRS Extend COBRA Deadlines

Amid the COVID-19 pandemic, Wisconsinites, along with the rest of the nation, have endured sudden and severe job loss.  As of May 14, 2020, the University of Wisconsin Center for Research on the Wisconsin Economy estimated the Wisconsin unemployment rate to be 21.9%.  In addition to the significant financial losses that attend such massive changes in employment status, job loss often results in the loss of health coverage.  Recent data indicates that roughly 57% of Wisconsin’s non-elderly population (i.e., non-Medicare) obtain their health insurance through an employer.

As many are familiar, one of the health insurance options available to those who lose their employment and employer provided health insurance is to apply for COBRA, which allows an employee and his or her dependents to maintain coverage at their own expense by paying the full cost of the premium.  Of course, there are certain deadlines that apply to seeking COBRA coverage.  Normally, a person has 60 days from the date of receipt of the COBRA notice to elect COBRA (election period), and then 45 days after the date of COBRA election to make the initial premium payment (premium payment period).

However, with the sudden and massive job losses due to the COVID-19 pandemic, on May 4, 2020, the U.S. Department of Labor and the IRS extended these standard COBRA deadlines.  Under the new rule, many COBRA deadlines are extended beyond the “Outbreak Period,” which is defined as March 1, 2020, to 60 days after the end of the National Emergency declaration.  The relief specifically directs all group health plans subject to ERISA or the IRS Code to disregard the period from March 1, 2020, through 60 days after the announced end of the national emergency when determining certain periods and dates, including the election period for COBRA continuation coverage and the date for making COBRA initial premium payments.

These changes are a welcome acknowledgment by these entities that the huge societal upheaval caused by the pandemic has made meeting standard deadlines increasingly difficult.  Feel free to contact one of our employment attorneys with any questions or concerns.  Be well and stay safe.

 

Take it Easy on the Beers While Riding a Lawn Mower

Take it Easy on the Beers While Riding a Lawn Mower

If you are like me, after mowing the lawn and job well cut, you may enjoy a cold refreshing adult beverage.  With that frosty refreshment in mind, I stumbled upon a recent, and unique, Wisconsin Court of Appeals decision that held that a riding lawn mower is a “motor vehicle” for purposes of Wisconsin’s Operating While Intoxicated (OWI) statute.  Since we are in the doldrums of winter, I figured the case was worth a share as a humorous public service announcement during these dark and cold days.

In the recent State v. Shoeder case, following his departure from a local tavern, the defendant was arrested for an OWI while he was operating a riding lawn mower on the shoulder of a public roadway.  The defendant moved to dismiss the charge, arguing that a riding lawn mower is not a “motor vehicle” within the meaning of the OWI statute, and instead it was more akin to Wisconsin’s definition of an “all-terrain vehicle” (OWI while on an ATV had different penalties).  The trial court and Court of Appeals disagreed with the defendant’s position.

In reaching its decision, the Court of Appeals looked at the definitions of “motor vehicle” and “vehicle.”  Under Wisconsin law, a “motor vehicle” is any vehicle that “is self-propelled, except a vehicle operated exclusively on rail.”  Crucial to the decision was the broadly defined “vehicle,” which includes “every device in, upon, or by which any person or property is or may be transported or drawn upon a highway, except railroad trains.”  Wis. Stat. § 340.01(74).

Applying these definitions to the defendant’s chosen conveyance, the court determined that the riding lawn mower was a “motor vehicle” and “vehicle;” it is self-propelled and a device on which a person may be transported on a highway.  The court further rejected the defendant’s argument that the riding lawn mower should be considered an “all-terrain vehicle,” as it did not meet the ATV definition requirement of being “equipped with a seat designed to be straddled by the operator.”  Wis. Stat. § 340.01(2g).

It is important to highlight a very important fact that led to this defendant’s predicament:  He was using the riding lawn mower on the shoulder of a public roadway.  As with any OWI in Wisconsin, the operation must have taken place on a public roadway or highway; a homeowner’s lawn is not going to be considered a public roadway for purposes of the OWI statute should someone make the mistake to over imbibe.   That all said, the safest route is to limit your beer consumption to when you are done cutting the lawn and are sitting back enjoying the fruits of your labor.

 

Which Insurance Companies Do I Have to Talk to After an Auto Accident?

Which Insurance Companies Do I Have to Talk to After an Auto Accident?

Following an auto accident, victims are often bombarded with calls from claims personnel connected with various insurance companies asking how the accident happened and what injuries were sustained. Usually, there are three different insurance companies trying to get information: (1) the liability insurer for the at-fault driver, (2) your own auto insurance company and (3) your health insurance company.

The insurance company you have no obligation to speak to and who we recommend you do not speak to is the liability insurer for the at-fault driver. Almost without fail, soon after an accident, injured drivers will receive a call from a claims person from the responsible party’s insurance company. This claims person will likely be recording the conversation and will ask questions about how the accident occurred and what injuries were sustained; rarely is this to your benefit. Being only a few days out from the collision, the injured victim will not have the police crash report and investigation findings, will have only been discharged from urgent care or the ER and not had an opportunity to see their doctor or a specialist for their injuries. In other words, the injured victim usually does not know the full extent of their injuries or the details of the accident.

In spite of this information deficit, the at-fault insurance company will use this opportunity to lock you into how the collision occurred and what your injuries are all without the benefit and protection of counsel. This is a statement that may be used against you at future depositions and trial. Worse still, there are some insurance companies who use this early opportunity to pressure you into a accepting a settlement offer.

On the other hand, you do have a duty to communicate and cooperate with your own auto insurance and your health insurance company. Your insurance policies have specific terms and conditions that you must abide by, one of which is that the insured has a duty to cooperate and inform the insurance company about the loss (i.e. the collision and your injuries). If you choose to ignore your own insurance companies, you risk them not paying for medical treatment related to the collision and possibly risk your uninsured and underinsured motorist coverages should you need them. We are often told by our clients that one of the services they appreciate most is our office’s ability to force all insurance companies to run their questions, forms and requests through our office which we handle. This allows our clients to focus on the most important thing after an accident: getting better.

 

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