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Reducing Clauses are Eliminated with New Insurance Laws

Under the 2009 changes to Wisconsin motor vehicle insurance law, reducing clauses in underinsured policies are eliminated.  Historically, if your claim was worth more than the amount of insurance that the at fault driver had, you could make an underinsured motorist claim against your own insurance policy (provided that you had underinsured coverage at the time).  However, insurance policies contained a provision called a reducing clause.  Under the reducing clause, the amount that could be collected in an underinsured claim was reduced by any amounts recovered from any other insurance policy.  Therefore, under the old law, if the at fault driver had a $100,000 liability policy, your underinsured policy was $100,000, the most you could collect was $100,000 because your $100,000 underinsured policy was reduced by the $100,000 you received from the at fault driver, eliminating your coverage.

Under the 2009 insurance law changes, all insurance policies issued on or after November 1, 2009 cannot contain an underinsured reducing clause.  Therefore, under the previous example, you are now able to collect $200,000 for your injuries.  Under the new law, the amount of underinsured coverage listed on your policy is the amount you can recover in addition to the at fault driver's liability insurance if you are seriously injured.