Two vehicles backed into each other in a Wisconsin grocery store parking lot. The consensus was that the fault was 50/50. One party’s insurer paid the claim as a collision loss with a $500 deductible. Following a subrogation recovery from the other party’s insurer, this insurer offered to refund 50% of the deductible, i.e., $250. The insured’s agent feels that the insured is entitled to reimbursement of the entire $500 deductible.

Who is correct?

The answer most often lies in each state’s statutes, regulations, regulatory directives, or governing jurisdictional case law. While I can’t attest to the accuracy of the information, this law firm’s website has the best chart I’ve seen listing all 50 states:

Deductible Reimbursement Laws in All 50 States

According to the chart, for the present claim in Wisconsin:

Not only has Wisconsin adopted the made whole rule, but it is sometimes considered to be the mother of all made whole states because its early decisions on the Made Whole Doctrine and its procedures with regard to determination of how and when an insured is made whole, have been used as an example by a large number of other states. In Wisconsin, an insured must be made whole before an insurer may recover anything from the tortfeasor

However, according to the chart, this is reportedly the position of the Wisconsin insurance department:

Automobile and Property: No applicable statute or Administrative Code provision exists. Wisconsin’s Office of the Commissioner of Insurance (OCI) orally advises it relies on case law to establish if the insured is entitled to the first dollar collected. Rimes v. State Farm Mut. Auto. Ins. Co., 316 N.W.2d 348 (Wis. 1982). Note: The Commissioner indicates that it would not object if the insurer reduced reimbursement by the percentage of comparative negligence of insured – assuming insurer’s subrogation efforts to collect money from at-fault driver also included same reduction. The Commissioner “recommends” a written agreement with the insured regarding reimbursement of the deductible, including possible pro-rata reduction for collection costs.

You might find this chart useful. It is the copyrighted work product of the Matthiesen, Wickert & Lehrer, S.C. law firm, but is publicly available at the link above.

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Bill Wilson

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One of the premier insurance educators in America on form, coverage, and technical issues; Founder and director of the Big “I” Virtual University; Retired Assoc. VP of Education and Research from Independent Insurance Agents & Brokers of America. Reprint Request Information