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Tuesday, May 10, 2011

Insurance Coverage for Bicyclists and Changes on the Horizon


            I never really thought about insurance coverage, should I be involved in a collision or hit-and-run while riding my bike, until I started law school a few years ago.  I’m betting many of you reading this blog entry might not have thought about this until reading this post.

            In case you don’t really feel like reading all about insurance coverage and whether you are insured/ covered while riding your bike, I will give you the short version in this paragraph.  The answer is, if you have auto insurance you most likely have coverage while riding your bicycle, because if you remember from earlier posts, a bicycle is a vehicle under the Wisconsin Statutes.  For a bicycle not to have coverage, there would have to be a specific exclusion in your insurance policy.  The insurance policy could give you coverage for collisions you cause, or collisions you are involved in where the at-fault person is either uninsured (UM) or underinsured (UIM).  If the at-fault person has insurance coverage for his/her vehicle, then the at-fault operator’s insurance company would most likely be liable to the injured party for damages.

            A more interesting situation arises with hit-and-run incidents.  In a recent case, Zarder v. Humana Ins. Co., 324 WIs.2d 325 (2010), the Supreme Court of Wisconsin was faced with the issues of what defines a “hit-and-run” driver and based on that definition did the minor bicyclist have insurance coverage under his parents policy for a uninsured at-fault driver.  The quick answer is, in this particular case, the Supreme Court held that the injured cyclist could recover under his parents UM policy.

            The longer explanation is as follows.  First, the court discussed a standard rule of contracts- that ambiguous terms must be construed against the drafter of the contract because the drafter has the ability to define all terms of a contract.  Secondly, the court looked to the definition of a “hit-and-run” driver under the policy language.  The court found that the term “hit-and-run” was undefined in the insurance contract and that there were two reasonable conclusions a person could find as the definition of a “hit-and-run” driver.  “A reasonable insured could conclude that a hit-and-run vehicle is a vehicle which strikes an insured and then flees the scene of the accident without stopping.  However, a reasonable insured might also conclude that a hit-and-run vehicle is one that strikes an insured and then leaves the scene of the accident without the driver providing identifying information.  Id. at 346 (emphasis added.)  Thus, a hit-and-run driver could be one who hits a person/vehicle, stops and checks on the operator of the vehicle and leaves without identifying himself/herself and providing such identifying information to the person who was struck by the hit-and-run driver.  (This is what happened in Zarder.)

            This case was significant in that the Supreme Court of Wisconsin identified two ways in which a driver could be classified as a hit-and-run driver if the insurance policy does not specifically define the term “hit-and-run”.  Mainly, that a driver can be a hit-and-run driver even if he/she stops to check on the condition of the person he/she hit, if the driver then leaves the scene without providing any identifying information.

            However, thanks to our new Governor, Scott Walker (chills just went down my spine when I wrote that, and not the good kind), changes are on the horizon.  (The following changes go into effect on November 1, 2011)

            First, it is roll back the clock time.  The minimum coverage amounts for liability insurance will be rolled back to the limits set forth in 1982, which are $25,000 for bodily injury or death of one person and $50,000 for bodily injury or death of more than one person.  This will also apply to uninsured motorist (UM) coverage.  (Currently it is $100,000/$300,000)

            Second, underinsured motorist (UIM) coverage is defined by statute, and to see if UIM coverage applies you compare the negligent driver’s liability insurance limit with the insured’s (injured party's) policy.  Thus, there is no coverage under the insured’s UIM policy if the negligent driver’s liability limits are at least as great as the limits of the insured’s UIM coverage.  However, UIM remains mandatory but the minimum coverage is reduced to $50,000/$100,000.  (Currently it is $100,000/$300,000)

            Third, insurance companies will no longer be required to provide written, or verbal, notification to a purchaser of insurance that a purchaser can buy umbrella coverage such as UM/UIM.

            Lastly, phantom drivers (example- a driver who causes you to run off the road/ hit a barrier, but does not actually hit your vehicle) are defined in the bill and the bill requires the accident to be reported to the police or other authorities within 72 hours of the accident, and collaboration in the form of a statement under oath that must be submitted to the insurance company within 30 days of the accident, or coverage will be denied.

(Author’s note:  there is other changes the bill makes, but I have not discussed them all for the sake of brevity.)

            So, the moral of the story is if you are involved in a collision on your bike, you may be covered by the at-fault operator’s insurance.  If that driver does not have insurance, you may be covered under your auto insurance if you have UM/UIM coverage and no exclusions apply.  So look at your insurance policy and be aware of what is and is not covered if the unfortunate occurs and you are involved in a collision that involves damages that you wish to recoup (bodily injury, hospital bills, future care, property damage).

            The greater moral of the story is, if you can afford the premiums, buy UM/UIM coverage for you and your family.  Increase the limits of your policy because it is more likely than not that if you are involved in a collision, you will need more than the minimum limits of $25,000/$50,000.  Buy an umbrella policy that will give you more coverage.  The best thing you can do for yourself and your family is ensure that you have plenty of insurance coverage should the unfortunate happen.

            As always, ride safe and enjoy the ride.  Yay bikes!

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