This clause can reduce a person’s liability coverage to the state-required minimum of $20,000/$40,000 (per person/per accident) if a family member is at fault for a crash and another family member is injured as a result. Below is an example of how a step-down clause might affect a person and his or her family members:
A driver has $500,000 worth of coverage. However, his policy includes a step-down clause. One day, he drives his car with his daughter and his daughter’s friend as passengers. He causes a crash, and both suffer injuries as a result of the accident. Because he has a step-down clause in his policy, his daughter (the driver’s daughter) can only recover a limited amount. So then, the insurance company’s liability coverage for the daughter is capped at the state-mandated minimum of $20,000, while the other child (the daughter’s friend) can make a claim up to the policy limits.
How Are These Clauses Concealed in Policies?
The language used to describe or address these clauses is often hidden in policies. An example of how such a provision might appear in a policy is written below:
“Coverage under this Part I, including our duty to defend, will not apply to any insured person for…Bodily injury to you or a relative. This exclusion applies only to damages in excess of the minimum limit mandated by the motor vehicle financial responsibility law of Michigan.”
Oftentimes, insurance companies do not inform individuals about this provision. In some cases, insurance adjusters are not even aware that a policy includes a step-down clause because it is often standard for certain insurance carriers to include them.
Insurance Carriers that Tend to Include Step-Down Clauses
Our team at Goodman Acker P.C. has found that the following carriers tend to integrate step-down provisions in their policies:
- Grange Insurance
- Farm Bureau Insurance
How to Ensure Step-Down Provisions Do Not Negatively Affect You
When challenged, Michigan’s appellate courts have consistently upheld step-down provisions. Unfortunately, the Michigan Insurance Commissioner has done nothing to eliminate the use of such clauses. As a result, our Detroit personal injury lawyers have recommended that individuals complete the following practices to ensure these provisions do not negatively affect them:
- Spread the word about the clauses and the dangers they present
- Review insurance policies and ask friends and family members to review their insurance policies
- If an auto insurance policy includes a step-down clause, consider purchasing a new policy with an insurance company that does not use step-down clauses
- Write to the Michigan Insurance Commissioner
Have Questions or Concerns Regarding Your Insurance Policy? Call Our Team
If you have any questions about your insurance and have been injured in an accident we recommend you call our office right away.
Don’t wait to get in touch with experienced legal counsel. Contact Goodman Acker P.C. as soon as possible!