Frequently Asked Questions on Auto Insurance

The Insurance Contract
Wisconsin's Financial Responsibility Law
Physcial Damage Coverage
Claims
Cancellation/Nonrenewal
Rating
Miscellaneous

The Insurance Contract

What is auto insurance?

Auto insurance is a contractual agreement between an insurance company and an insured (policyholder). In exchange for a premium, the insurance company promises to provide bodily injury liability coverage, property damage liability coverage and uninsured motorist coverage.

What are the different parts of the auto policy?

The first section of the policy is the "declarations page," which lists what coverages are in effect and the dollar amount of coverage. The next section of the policy includes the actual contract language, which clearly describes the insurance company's rights and responsibilities as well as the policyholders. Your policy may also contain a third section called the endorsement section, which changes or modifies the policy. Certain general provisions are required by law, but policies can be very different. It is important to read any policy issued to you as soon as you receive it. If you have questions, contact your agent or insurance company for clarification.

Who does the auto policy cover?

The auto policy provides coverage to the named insured, spouse and other relatives living in the home as well as anyone to whom the named insured has given permission to operate the vehicle.

Wisconsin's Financial Responsibility Law

Is auto insurance mandatory in Wisconsin?

Wisconsin has a financial responsibility law. It is designed to make sure that any motorist licensed to drive in Wisconsin has insurance or enough money to pay for damages to others that may be caused by a motor vehicle. These requirements may be met through a motor vehicle liability insurance policy, a surety bond, personal funds, or certificate of self-insurance. Details are available at the Department of Transportation, Division of Motor Vehicles (DMV), Hill Farms State Office Building, 4802 Sheboygan Ave., Madison, WI 53702.

If I decide to satisfy the financial responsibility requirements of Wisconsin by buying auto insurance, what coverages are required in Wisconsin and what are the minimum limits I can purchase?

If you decide to satisfy the requirements of the Wisconsin Financial Responsibility Law by buying auto insurance your policy must provide the following minimum liability coverage:

• $25,000 for injury or death of one person;
• $50,000 for injury or death of two or more people; and
• $10,000 for property damage.

The law also requires uninsured motorist coverage of $25,000/$50,000 for bodily injury only.

You may want to protect your assets by purchasing more coverage than what is provided in the minimum policy required in Wisconsin. Higher limits are available for an additional premium.

What is covered under "bodily injury" coverage?

This coverage does not protect you or your car directly. If you cause an accident injuring other people, it protects you against their claims up to the stated amounts for medical expenses, lost wages, pain and suffering and other losses. It will also usually pay if the accident was caused by a member of your family living with you or a person using your own auto with your consent. It does not pay for bodily injury you may sustain.

What is covered under property damage liability coverage?

Property damage liability insurance pays for any damage to the property of others up to the stated amount provided by the policy. For example, a crushed fender, broken glass, or a damaged wall or fence. Your insurance will pay for this damage if you were driving your auto or if it was being driven by another person with your consent. Property damage liability also pays if you damage government property like a light pole or signpost, up to the limit you choose.

What is "uninsured motorist" coverage?

Uninsured motorists (UM) coverage applies to bodily injury you, your family, and other occupants of your vehicle incur when hit by an uninsured motorist or hit-and-run driver. It also covers you and your family if injured as a pedestrian when struck by an uninsured motorist or hit-and-run driver. It protects you by making sure that money is available to pay for your losses that were caused by someone else. The minimum amount of coverage required by law is $25,000 per person and $50,000 per accident for bodily injury only.

You may want to purchase more than the minimum coverage required by law if you feel the need for more protection. Uninsured motorist coverage does not cover your property damage and does not protect the other driver. Your insurer may sue the other driver for any money the insurer pays you because of the other driver's negligence.

What is "underinsured motorists" coverage?

Underinsured motorists (UIM) coverage increases the bodily injury protection to you and the people in your car up to the amount of coverage you purchase. It becomes effective when the party causing an accident has lower bodily injury liability limits than your UIM limits. The maximum dollars paid is then the difference between the two limits.

For example, assume the UIM limits selected were $100,000 per person and the person causing the accident had bodily injury limits of $50,000 per person. Under this scenario, you could collect up to $50,000 from the at-fault driver and up to an additional $50,000 (the difference in limits) under your own UIM coverage. UIM coverage typically does not "add" the amount you purchased to the amount available from the person causing the accident.

UIM coverage is an optional coverage in Wisconsin. Insurance companies are required to notify you of its availability. The minimum limits of UIM coverage, if accepted after notification, are $50,000 per person and $100,000 per accident.

Physcial Damage Coverage

What does collision coverage provide?

Collision coverage pays for physical damage to your vehicle caused by your vehicle colliding with an object, including another car or if it overturns. In the event of an accident, collision coverage will pay to repair your vehicle up to the amount equal to the value of the vehicle before the accident. Your own insurer will pay for such damage even if the collision is your fault.

Collision premiums are based on the make and model year of your car. You should evaluate the current market value of your car and your ability to afford a similar car should it be destroyed before you purchase this coverage. You may not need this coverage if your car has decreased in value or if you can afford to replace it.

What does comprehensive coverage provide?

Comprehensive (also called other than collision) coverage pays for damage to your vehicle resulting from fire, vandalism, water, hail, glass breakage, wind, falling objects, civic commotion, or hitting a bird or an animal. Damage from striking a deer is a relatively frequent accident in Wisconsin. It is important to know that most policies cover hitting an animal under comprehensive, not collision, insurance.

Comprehensive coverage also pays if your vehicle or parts of it, such as a battery or tires, are stolen. Flood damage to your car is also covered if your auto insurance policy includes comprehensive coverage. If you carry collision without comprehensive, you are not covered for flood damage.

How is the deductible for comprehensive or collision coverage applied?

Deductibles for comprehensive or collision coverage are applied for each occurrence. A deductible is the dollar amount that you have to pay toward the loss before the insurance company begins to make payments on the loss. For example if you suffered a comprehensive loss (a deer hit) and that same day suffered a collision loss (a rock hit your windshield), your policy allows the insurer to apply two different deductibles. Many companies will waive the deductible for the windshield occurrence if you can repair it rather than replace it.

If I have my car financed, do I need to purchase auto insurance?

If you do finance the car, the financial institution (lender) will require that you have car insurance. The terms of your loan will most likely require you to provide comprehensive and collision insurance. This is because the lender considers your vehicle collateral for the loan. If your policy lapses, the bank will force coverage (obtain a policy) and add it to your loan. Forced coverage provides protection to the bank, not you, for their interest in the car and nothing else. The cost of this insurance is much higher than you would pay if you bought your own policy through a standard carrier.

Claims

I submitted two estimates and the insurance company revised the estimate and paid me based on the revised estimate. Can they do this?

Yes, as long as the revised estimate properly repairs your vehicle. You need to have your body shop review the revised estimate. If they feel they cannot properly repair your vehicle based on the revised estimate, the repair facility should contact your adjuster.

Does the insurance company have a right to examine a damaged vehicle?

Yes. This is discussed under the "Duties after Accident" section of your policy. The personal auto policy states that you must permit the insurance company to inspect and appraise the damaged property before its repaired or disposed of.

Can I require the insurance company to replace my car?

The personal auto policy is not a replacement policy. Coverage for your car is based on actual cash value. The actual cash value (ACV) of your car is based on the value of your car at the time of the accident, taking into account its current market value. Therefore, the insurance company's obligation is to repair the car based upon its actual cash value not its replacement cost.

I was involved in a traffic accident recently and my agent asked me to get two estimates. Why do I need to get two estimates?

Wisconsin law does not require a certain number of estimates nor does it prohibit the company from specifying the number of estimates you need to get. Requiring you to obtain two estimates is a very common and acceptable practice by most insurance companies. Companies may vary on their need from as few as one to as many as three.

I had a minor traffic accident and I do not want to report it to my insurance company because my rates may go up. Is there a problem with not sending it to my company?

While there is nothing, which absolutely requires you to file a claim or report of possible loss to your insurance company, there are ramifications for you not doing so. For example, if the other party was injured and sought legal action against you and you did not cooperate by notifying your company or cooperating in their defense of a claim, you could be found liable without any liability coverage from your insurance company. In other words, you could end up paying it out-of-pocket. Furthermore, whether you notify your company or not, if they do any type of a check on your driving record your rates could be raised regardless. The decision depends upon the situation.

What is meant by aftermarket parts?

Auto repair shops may use aftermarket and/or used parts when repairing or replacing a damaged part (i.e., bumpers, bumper covers, and associated bumper parts, etc.) Aftermarket parts are produced by companies other than the original equipment manufacturers (known as OEM parts).

Auto insurance contracts do not generally specify what parts will be used. You may request that aftermarket parts not be used to repair your vehicle, but you are responsible for any repair costs that exceed the final claim settlement negotiated with the insurance company.

Can an insurance company write an estimate using parts not made by the original manufacturer or salvage parts?

The personal auto policy requires the insurance company to repair your vehicle--limited to the value of the vehicle before the damage. Insurance companies do not have to specify use of original equipment manufacturers parts when repairing the vehicle. A company only has to return the vehicle to its condition before the damage.

I was recently at a convention out of town and left my suitcase in the back seat of my vehicle. I locked my car, but when I returned my suitcase was gone. I turned a claim into my automobile insurer and the insurer says there is no coverage. What do I do?

Automobile insurance policies do not cover theft for personal items. However, you could consider filing a claim with your homeowner's or renter's policy. Most homeowner's or renter's policies allow for loss of property off the insured's premises. Some policies may have limitations. Your insurer may require that you show forcible entry occurred or that you report the theft to the police. You will need to review your policy to see what situations are required. If you have any questions you should discuss them with your insurance agent.

If I have only liability insurance, does my policy pay my medical and car repair bills?

No. The bodily injury liability coverage does not protect you or your car directly. If you cause an accident injuring other people, bodily injury liability coverage protects you against their claims up to the stated amounts for medical expenses, lost wages, pain and suffering and other losses. The property damage liability coverage pays for any damage up to the stated amount you cause to the property of others such as a crushed fender, broken glass, or a damaged wall or fence.

The insurance company is totaling my car. How can I make sure I get what it's worth?

An insurance company totals a car if repairs would cost more than it is worth. An insurance company will use various sources to value your car, including, but not limited to the National Automobile Dealers Association Used Car Guide ("Blue Book") or the CCC Information Services, Inc., guide. The company's offer, therefore, might not recognize your car's condition, special features or value on the local market. A company is more likely to raise its offer if you can show that your car would sell for a higher price in your area. Keep the lines of communication open. Get several used car dealers' written price quotes for a similar automobile. Newspaper used-car ads also can build your case. Remember these quotes and ads provide asking prices and the actual value or sales price could be lower.

What if my insurance company totals my car but we cannot agree on the amount to be paid by my collision coverage?

Your policy offers a procedure called appraisal as a way to resolve the dispute. You and the company each choose a damage appraiser. (See Auto Appraisers in the yellow pages.) The two appraisers select an umpire. An estimate agreed to by any two of these three people is binding. Each party must pay its chosen appraiser and split the other expenses of the appraisal process. Appraisal is available only in disputes between you and your insurance company. It is not available if the other driver was at fault and you disagree with his or her company's offer.

Can an insurance company tell me where to get my car fixed?

Your insurance company may use a specific repair shop to support its settlement offer. It may not require, you to have your car repaired at a specific auto repair shop. If you choose to have the repairs done at a facility not approved by your insurance company, you are responsible for any repair costs that exceed the final claim settlement.

The other driver's insurance company wants me to sign a release on my injury claim. How long can I delay this?

Sign the release when you are satisfied with your total settlement. Get a letter from your doctor estimating the cost and length of your future medical treatment. You may, of course, consult an attorney before accepting a settlement. You have three years after the accident, under Wisconsin law, to either settle your claim or file a lawsuit.

What coverage is provided if I pull a trailer with my vehicle?

In most cases, if the vehicle pulling the trailer is covered under the policy, the liability coverage will be extended to the trailer if you own the trailer. However, if you own the trailer, physical damage coverage (comprehensive and collision) must be purchased separately. You will need to review your policy and discuss your options with the insurance agent. Coverage for trailers and related equipment vary by company.

What is meant by comparative negligence?

Wisconsin has a comparative negligence law that means responsibility is frequently shared. The comparative negligence law is based on a percentage of negligence. This means you may recover damages from another party providing your negligence is not greater than the other party, but your damages shall be reduced by the percent of negligence attributed to you. You are barred from recovery if your negligence is greater than another party's negligence.

The other driver hit my car. Why does his insurance company say it has to pay for only 90% of the damage?

Wisconsin has a comparative negligence law. This permits "fault" and responsibility for the damage to be divided among the parties. You can collect from the other driver or his company only when you are less than 50% at fault. Even if you were not cited, you could still be partly at fault. If you are 10% at fault, the other driver is liable for only 90% of your damages. You are liable for the other 10%. Insurance companies will make their estimate of the comparative negligence by using details of the accident.

Cancellation/Nonrenewal

When may an insurance company cancel my auto insurance policy?

An insurance company may cancel a new policy any time within the first 60 days without providing you with a reason for the cancellation. A cancellation is also permitted during the terms of the policy if the premium is not paid when it is due, discovery of fraud or material misrepresentation made by you or your representative in obtaining your insurance, or by your pursuit of a fraudulent claim under your policy, or significant changes in insuring characteristics. For the situations discussed above, no cancellation is effective until at least 10 days after the insurance company mails or delivers to you a written notice of cancellation.

When may an insurance company nonrenew my auto insurance policy?

Nonrenewal refers to the termination of a policy at the expiration date. If an insurance company decides it does not want to renew your policy, it must mail or deliver to you a nonrenewal notice at least 60 days before the policy's expiration date.

Does an insurance company have to say why it refused to renew my policy?

Yes, the nonrenewal notice must provide the reason for its decision to nonrenew a policy.

Does my auto insurance policy have a grace period?

Unlike health insurance policies, auto insurance policies, do not have a required grace period. The premium is due, at the insurance company, on the date identified on the premium notice. If the premium is not received by that date the policy automatically terminates.

Can credit history be used as a reason to nonrenew or refusal to renew my car insurance?

Insurers may use credit information as one of the criteria they consider when underwriting personal lines insurance. However, it is the position of the Wisconsin Insurance Commissioner's Office that insurers should not use credit information, whether they use credit reports or credit scoring mechanisms, as the sole reason to refuse an application, cancel a new insurance policy in its first 60 days of coverage, or nonrenew an existing policy.

What can I do if my policy has been canceled or nonrenewed and I cannot find another insurance company that will write auto insurance for me?

If you try several insurance companies and cannot find coverage, you can be insured through the Wisconsin Automobile Insurance Plan. You can apply through any licensed property and casualty insurance agent. For general information on the plan, you may call or write to Wisconsin Auto Insurance Plan (WAIP), 20700 Swenson Drive, Suite 100, Waukesha, WI 53186 (262) 796-4553.

Rating

What affects the price of auto insurance?

When determining the rate for an auto insurance policy, insurers separate drivers into categories called classifications. Drivers are classified based on a number of different characteristics, including but not limited to age and gender, marital status, where the vehicle is garaged, driving record, make and model of vehicle, prior insurance coverage and annual miles driven. History has shown that drivers with certain characteristics, such as a poor driving record, have a greater chance of being involved in an accident, and the drivers in those classifications must pay higher rates. While some of the classification criteria (such as age and sex) are out of your control, others, such as driving record and type of vehicle driven, are within your control.

Can the driving/accident records of my child and/or spouse have an impact on my ability to buy auto insurance?

Yes, the driving record of any licensed driver in the household will affect the decision of the insurance company to insure your vehicle(s). It can cause you to be turned down for insurance coverage or to pay higher insurance premiums.

How much will my insurance cost?

Premiums or the amount you pay for insurance can vary. The type of car you drive, your driving record, your age, your sex, where you live, and how much you drive usually affect the cost.

Is there a way I can reduce my premiums?

Every auto insurer has its own package of special discounts to attract particular types of customers. Most insurance companies provide discounts for at least some of the following: accident free drivers discount; a package discount for insuring your home and auto with the same company; multiple auto discount; good student discount; nonsmokers discount; and passive restraint discount (for vehicles with air bags or automatic seat belts). You may also consider higher deductibles for your comprehensive and collision coverages.

Will my insurance be affected if I'm in an accident or get a ticket?

You may have to pay more for insurance if you are involved in an accident, get a ticket for a traffic violation such as speeding or file too many claims. You may even lose your present insurance when it comes time to renew your policy if you appear to be a reckless driver. Every insurance company decides how it will treat accidents and violations for the risks it will insure.

What is a "nonstandard insurance" company and how can I return to the "preferred" market?

A nonstandard (high-risk) insurance company insures drivers who don't meet eligibility standards of preferred companies. Preferred market refers to a group of insurance companies that specialize in insuring drivers with excellent driving records. Usually, a person isn't eligible for a preferred company because of a ticket, an accident, or having been canceled by an insurance company. Some companies won't insure a person who has had a ticket or an accident in the previous three years. Other companies won't insure sports cars or other high-performance vehicles.

A nonstandard insurance company charges more because of the higher cost of insuring drivers whom have more tickets or accidents. Statistics show that companies pay more in claims insuring people with multiple accidents or traffic violations.

Usually, drivers can get insurance from a preferred company when they have had a clean driving record for the previous three years to five years.

Will my insurance be affected if I'm involved in an accident or get a ticket?

You may have to pay more for insurance if you're in an accident, get a ticket for a serious traffic violation such as speeding or file too many claims. You may even lose your present insurance when it comes time to renew your policy if you appear to be a reckless driver. But you'll still be able to get insurance from another company or your state's assigned risk plan.

If I borrow a car from a friend or relative for a short time while my car is being repaired, will my policy cover me while I am driving the borrowed car?

The policy covering the borrowed car would be primary and in most cases, your policy would cover the vehicle on an excess basis. If no policy covers the borrowed car, most companies will treat your policy as the primary coverage for the borrowed car and coverage would then depend upon what is provided by your policy.

What do you mean by primary and excess basis?

Primary means that the policy will provide coverage first, and excess means that policy will provide coverage after the limits of the primary policy have been exhausted.

If I rent a truck to move my personal property, will my personal auto policy provide any coverage for the rental truck?

Most personal auto policies do not provide any coverage for the rental truck. You might want to contact your insurance agent about what if any coverage is provided in your policy.

I am dissatisfied with the repair work done to my vehicle by a repair facility. What obligation does the insurance company have to correct this?

The insurance company is responsible for paying for repairs to your vehicle. Since you choose the repair facility, you are responsible for making sure the job is done satisfactorily.

What is the difference between betterment and depreciation? Can my insurance company reduce my settlement based on either?

Betterment means that your repaired vehicle is better than it was before it was damaged. Your insurance company may only reduce your settlement if your vehicle's resale value has increased over what it was before the accident. Generally, an insurer will deduct the difference between the cost of a used part (appropriate for age and condition of the vehicle) and the cost of a new part. Betterment is only considered for major parts such as transmissions or engine blocks. Betterment might be considered for other parts that if new would improve the value or salability of the vehicle.

Depreciation refers to a reduction in your settlement based on the age or use of a part that is to be replaced. Certain parts on your vehicle have a "life expectancy" and your insurance company may take this into consideration. For example, if a tire on your vehicle is expected to last 60,000 miles, but it was used for 30,000 miles at the time of the accident, your insurance company may elect to pay only 50% for a new tire.

Is there anything I should be aware of before switching companies?

When you apply for insurance to a new company, they have a right to underwrite your application. Insurers have the right to decide what types of drivers they wish to insure as long as they apply their criteria consistently and fairly. If you do not meet their underwriting guidelines, the company may cancel the policy within the first 60 days for their underwriting reasons. Therefore, any recent change in driving records, or claims history could result in cancellation. The cancellation is not effective until at least ten (10) days after the insurance company mails or delivers to you a written notice of cancellation.

Can my insurance company raise my premium due to an accident or traffic ticket?

Your insurer may charge an extra fee, a surcharge, if you are involved in a chargeable accident or were ticketed for a traffic violation. Surcharges must be applied in a uniform manner and are required to be filed with the Wisconsin Office of the Commissioner of Insurance (OCI).

A surcharge is used as a tool to properly price the exposure the insurer is writing, and not as a means to recoup payment made under a claim. The total dollar amount paid as the result of a claim usually does not affect the surcharge.

What happens if I file a claim with my own company for my share of the damages?

You pay your policy's collision deductible; your company will settle the full claim with you and take over your claim (subrogate) with the other company in order to collect the portion of the damages caused by the driver at-fault in the accident. If your company recovers from the other driver's company, it will refund your deductible minus your percentage share of the fault. Your insurance company will likely know about this accident whether you file a liability claim directly with the insurer of the at-fault driver or use your own collision coverage. Any type of claim or accident builds a history that insurance companies can use to underwrite or rate policies.

The body shop tells me the insurance company is forcing it to replace my Ford fender with an aftermarket part. Am I entitled to an original manufacturer Ford fender?

Your auto insurance policy requires the company to pay only for repairs with parts of "like kind and quality." That may include paying to straighten the fender, install a used one, or replace it with a new part from either Ford or an aftermarket part. Many insurance companies now specify aftermarket parts in order to hold down their claims cost and your premium price. You can request that aftermarket parts not be used to repair your vehicle, but you are responsible for any repair costs that exceed the final claim settlement negotiated with the insurance company.

Miscellaneous Auto Insurance Questions

Will my minimum liability limits Wisconsin policy protect me if I drive to another state that requires higher minimum liability limits?

Your Wisconsin policy limits will be interpreted to provide at least the minimum limits required by the laws of the state in which your are operating your vehicle.

What happens if my loan was more than my insurance company says my car was worth?

Sometimes the value of a car is less than the balance of your auto loan. There can be several reasons for this. Interest rate changes may have increased the amount of your loan. Rebates may not be applied to the purchase price, or poor maintenance of the auto may have reduced its value. The insurance company limits its claim payments to the actual cash value (ACV) of your car, regardless of the amount of your loan. If there is a total loss, the insurance company would only pay the ACV leaving the balance of the loan to be paid by the borrower. If you are concerned about this financial risk, you might consider asking your agent about "gap insurance."

When I buy an additional car or replace a car, does my policy automatically cover it?

Yes, but you need to be aware of certain limitations. An additional car automatically has the same coverage as the car with the broadest coverage provided by your policy. (For example: You already have two cars. One has just liability coverage. The other has liability, collision and comprehensive--the broadest coverage afforded by the policy. Therefore, if you buy a third car, it automatically will have liability, collision and comprehensive.)

A replacement car automatically has the same coverage as the car it replaced. (For example: You have two cars. You trade in the older car, which has only liability coverage, on a new car. This means the new car automatically has only liability coverage.)

Be sure to notify your insurance agent or company as soon as possible that you have added or replaced a car and which coverages you want for the new car. The personal auto policy requires the policyholder to notify the company or agent within a specified number of days. It is best to call your agent before picking up your car to make sure you have the coverages you want.

What can I do if I have a problem with my auto insurance company?

You should first attempt to resolve your concerns with your agent or with the company that sold you the policy. If you do not get satisfactory answers from the agent or company, contact the Wisconsin Office of the Commissioner of Insurance. A complaint form is included on this web site.

Make sure you have included detailed information about your insurance problem. Be sure that you include the correct name of the insurance company from which you bought the policy. Many companies have very similar names. Listing the wrong name may delay the investigation of your complaint.

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