Mailbag; Rep. Brett Davis Writes: Opposes Higher mandatory auto insurance liability limits

Insurance Mandate in State Budget Could Significantly Increase Auto Insurance Rates
Since Governor Doyle introduced his 2009-10 state budget proposal about two weeks ago, we are starting to learn more details about what is included in the 1,700 page document. In the past, it has been a rule that the Joint Finance Committee (JFC) would remove any non-fiscal policy items that the Governor would include in his budget bill. I am hopeful that this process will continue and JFC will remove a provision that would likely make automobile insurance more expensive for low and middle-income families in Wisconsin.

The budget bill, Assembly Bill 75, includes language that mandates increases in the minimum insurance coverage required in the state. The mandate would increase the current liability limits of $25,000 per person to $100,000 (a four-fold increase); $50,000 per accident to $300,000 (a six-fold increase); and $10,000 for property damage to $25,000 (a 150 percent increase). As I learn more about the implications of this policy, I have concerns over this provision being in our state budget, as it will not only force families to pay more for their car insurance, but it also does nothing to help fix our current budget deficit, create jobs, or boost the economy, which is what we should be focusing on.

According to the Insurance Alliance of Wisconsin, the average price of auto insurance would go up $300 per year - a 33 percent increase for low and middle-income drivers if this mandate becomes law. Wisconsin drivers currently enjoy the third lowest auto insurance rates in the country. If the mandate is enacted, Wisconsin would have the highest mandatory auto insurance coverage limits in the nation.

I am concerned that the government is telling families they must purchase unnecessarily high levels of auto insurance in such difficult economic times. According to the Insurance Research Council, 96 percent of all bodily injury claims are $15,300 or less. The Wisconsin Insurance Alliance (WIA) confirms that well over 90 percent of all auto claims are settled below $25,000. Therefore, it is unclear why motorists should be forced to pay for expensive rates above these levels.

Overall, I think this provision should be pulled out of the budget and go through a thorough debate on its own merits. We need to stay focused on enacting a budget that improves the business climate, creates jobs, and lowers the overall tax burden in our state.