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FAQ SHEETPI-233 (R 05/2021)Frequently Asked Questions – Automobile InsuranceThe Automobile Insurance PolicyWhat is automobile insurance?Automobile insurance is a contractual agreement between an insurance company and an insured (policyholder). Inexchange for a premium, the insurance company promises to provide bodily injury liability coverage, propertydamage liability coverage, and uninsured motorist coverage.Who does the automobile policy cover?The personal automobile policy provides coverage to the named insured, spouse, and other relatives living in thehome, and anyone who has permission from the insured to operate the vehicle.What are the different parts of the automobile policy?The first section of the policy is the "declarations page," which lists what coverages are in effect and the dollaramounts of coverages. The next section of the policy includes the actual contract language, clearly describing theinsurance company's rights and responsibilities as well as the policyholders. The policy may also contain a thirdsection called the endorsement section, which changes or modifies the policy. Certain general provisions arerequired by law, but policies can be very different. It is important to read any policy issued to you as soon as youreceive it. If you have questions, contact your insurance agent or company for clarification.Wisconsin’s Financial Responsibility LawIs automobile insurance mandatory in Wisconsin?Yes. All Wisconsin drivers are required to have an automobile insurance policy in force or, in limited situations,other security that could be a surety bond, personal funds, or certificate of self-insurance when operating a motorvehicle in Wisconsin. Details are available on the Department of Transportation's websiteat kd/proof-of-insurance.aspx.If I buy automobile insurance, what coverages are required in Wisconsin, and what are the minimum limits I canpurchase?Your automobile insurance 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 10,000 for property damageWisconsin law also requires uninsured motorist coverage with a minimum limit of 25,000 for one person and 50,000 for two or more people for bodily injury coverage.You may want to protect your assets by purchasing more coverage than the minimum required in Wisconsin. Higherlimits are usually available, but you may have to pay an additional premium.For more information or to file a complaint, visit our website or contact:See full disclaimer andp: 608-266-3585 p: 1-800-236-8517 f: 608-266-9935 [email protected] oci.wi.govoci.wi.gov/PublicationsOffice of the Commissioner of Insurance, 125 South Webster Street, P.O. Box 7873, Madison, WI 53707-7873copyright permissions:

What is covered under bodily injury liability coverage?This coverage does not protect you or your vehicle directly. If you cause an accident injuring other people, itprotects you from their claims up to the stated amounts for medical expenses, lost wages, pain and suffering, andother losses. It will also usually pay if the accident was caused by a member of your family living with you or aperson using your own automobile with your consent. It does not pay for bodily injury you may sustain.What is covered under property damage liability coverage?Property damage liability coverage pays for any damage you cause to the property of others up to the statedamount provided by the policy (i.e., a crushed fender, broken glass, or a damaged wall or fence). Your insurance willpay for this damage if you were driving your automobile or if it was being driven by another person with yourconsent. Property damage liability pays if you damage government property like a light pole or signpost, up to thelimit you choose.What is uninsured motorist coverage?Uninsured motorist (UM) coverage applies to bodily injury you, your family, and other occupants of your vehicleincur when hit by an uninsured motorist or hit-and-run driver. It also covers you and your family if injured as apedestrian when struck by an uninsured motorist or hit-and-run driver. It protects you by making sure money isavailable to pay for your losses that were caused by someone else. The minimum amount of coverage required bylaw 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 moreprotection. Uninsured motorist coverage does not cover property damage to your vehicle and does notprotect the other driver. Your insurer may sue the other driver for any money the insurer pays you because of theother driver's negligence.What is underinsured motorists coverage?Underinsured motorists (UIM) coverage increases the bodily injury protection to you and the people in your vehicleup to the amount of coverage you purchase if the at-fault party's bodily injury liability insurance limits are lowerthan your UIM coverage limits. The maximum amount payable is the difference between the two limits.Underinsured motorist coverage is not mandatory. Notice of coverage availability is required with the delivery of thepolicy. Coverage may be rejected. However, if requested, minimum coverage limits of 50,000 per person and 100,000 per accident are required.What is medical payments coverage?Medical payments coverage pays medical or funeral expenses for you or others injured or killed in an accident whileriding or driving in your automobile. It will also cover you or members of your family if you are struck by anautomobile as a pedestrian or while riding in another automobile. Medical payments coverage usually covers onlythose expenses not covered by health insurance, such as copayments, deductibles, etc. It will pay for your medicaland funeral expenses even if you cause the accident.Insurance companies must offer this coverage to you but you can reject it. If you elect to have medical paymentscoverage, the minimum limit is 1,000.Physical Damage CoverageWhat does collision coverage provide?Collision coverage pays for physical damage to your vehicle caused by your vehicle colliding with an object,including another vehicle, or if it overturns. In the event of an accident, collision coverage will pay to repair your2

vehicle up to the amount equal to the value of the vehicle before the accident. Your insurer will pay for suchdamage even if the collision is your fault.Collision premiums are generally based on the make, model, and year of your vehicle. You should evaluate thecurrent market value of your vehicle and your ability to afford a similar vehicle should it be destroyed before youpurchase this coverage. You may not need this coverage if your vehicle has decreased in value or if you can affordto replace it.What does comprehensive coverage provide?Comprehensive (sometimes called "other than collision") coverage pays for damage to your vehicle resulting fromfire, vandalism, water, hail, glass breakage, wind, falling objects, civil 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 policiescover 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 damageto your vehicle is also covered if your automobile insurance policy includes comprehensive coverage. If you carrycollision 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 dollaramount you must pay toward the loss before the insurance company begins to make payments on the loss.For example, if you suffered a comprehensive loss (you hit a deer) and that same day suffered a collision loss (ashopping cart hit your vehicle), your policy allows the insurer to apply two different deductibles.If I have my vehicle financed, do I need to purchase automobile insurance?If you finance the vehicle, the financial institution (lender) will require you to have automobile insurance. The termsof your loan will most likely require you to provide comprehensive and collision insurance. This is because the lenderconsiders your vehicle collateral for the loan. If your policy lapses, the bank will force coverage (obtain a policy) andadd it to your loan. Forced coverage protects the bank, not you, for their interest in the vehicle and nothing else. Thecost of this insurance is much higher than you would pay if you bought your own policy through a standard carrier.The Claims ProcessCan I require the insurance company to replace my vehicle?The personal automobile policy is not a replacement policy. Coverage for your vehicle is based on actual cash value.Actual cash value (ACV) of your vehicle is based on the value of your vehicle at the time of the accident, consideringits current market value. Therefore, the insurance company's obligation is to repair the vehicle based upon its actualcash value, not its replacement cost.What is meant by aftermarket parts?Automobile repair shops may use aftermarket and/or used parts when repairing or replacing a damaged part (i.e.,bumpers, bumper covers, associated bumper parts, etc.). Aftermarket parts are produced by companies other thanthe original equipment manufacturers (OEM). Parts manufactured by the original equipment manufacturers areknown as OEM parts. OEM parts are those that would have been original to the vehicle when it was manufactured.Automobile insurance contracts do not generally specify what parts will be used. You may request aftermarket partsnot be used to repair your vehicle, but you will likely be responsible for any repair costs exceeding the final claimsettlement negotiated with the insurance company.3

The insurance company is totaling my vehicle. How can I make sure I get what it is worth?An insurance company considers a vehicle a total loss if repairs would cost more than the vehicle is worth. Aninsurance company will use various sources to value your vehicle including, but not limited to, the NationalAutomobile Dealers Association Used Car Guide ("Blue Book") or the CCC Information Services, Inc., guide. Thecompany's offer, therefore, might not recognize your vehicle's condition, special features, or value in the localmarket. A company is more likely to increase its offer if you can show your vehicle would sell for a higher price inyour area. Keep the lines of communication open. Get several used vehicle dealers to write price quotes for a similarautomobile. Used-vehicle ads can also build your case. Remember these quotes and ads provide asking pricesand the actual value or sales price could be lower.The other driver's insurance company wants me to sign a release on my injury claim.Sign the release when you are satisfied with your total settlement. Get a letter from your doctor estimating the costand length of your future medical treatment. You may, of course, consult an attorney before accepting a settlement.You have three years after the accident to either settle your claim or file a lawsuit.What is meant by comparative negligence?Wisconsin has a comparative negligence law meaning responsibility is frequently shared. The comparativenegligence law is based on a percentage of negligence. This means you may recover damages from the other partyproviding your negligence is not greater than the other party, but your damages shall be reduced by the percent ofnegligence attributed to you. You are barred from recovery if your negligence is greater than the other party'snegligence.Cancellation/NonrenewalCan my insurance company cancel my automobile insurance during the term of my policy?An insurance company may cancel a new policy any time within the first 60 days and is not required to provide youwith a reason for the cancellation. Cancellation is permitted during the terms of the policy if the premium is notpaid when it is due, if the company discovers fraud or material misrepresentation made by you or yourrepresentative in obtaining insurance, if the company discovers that you pursued a fraudulent claim under yourpolicy, or if significant changes have occurred in insuring characteristics. For the situations discussed above, nocancellation is effective until at least 10 days after the insurance company mails or delivers to you a written noticeof cancellation.When is it allowable for my insurance company to nonrenew my automobile insurance policy?Nonrenewal refers to the termination of a policy at the expiration date. If an insurance company decides it does notwant to renew your policy, it must mail or deliver to you a nonrenewal notice at least 60 days before your policy'sexpiration date.Does an insurance company have to say why it refused to renew my policy?Yes, the nonrenewal notice must provide the reason for the insurance company's decision to nonrenew your policy.Does my automobile insurance policy have a grace period?Unlike health insurance policies, automobile insurance policies do not have a required grace period. The premium isdue to the insurance company on the date identified on the premium notice. If the premium is not received by thatdate, the policy automatically terminates.Can credit history be used as a reason to nonrenew or refuse to renew my automobile insurance?Insurers may use credit information as part of the criteria they consider when underwriting personal lines insurance.However, it is the position of the Wisconsin Office of the Commissioner of Insurance (OCI) insurers should not use4

credit information, whether they use credit reports or credit scoring mechanisms, as the sole reason to refuse anapplication, cancel a new insurance policy in its first 60 days of coverage, or nonre