Insurance policies are lengthy and often difficult to understand.  Many of us simply rely on our insurance agent when making decisions about what sort of coverage to purchase.  Our agent gives us a range of coverage options at different price points, and we tend to pick the cheapest coverage available.

Unfortunately, sometimes oversights in the purchasing process can come back to bite you if you or a loved one are injured in an auto accident.  One of the ways insurance carriers limit their coverage is to sell “step-down” liability policies at a reduced price.  These policies will provide you with a certain amount of liability coverage, which protects you financially if you injure another person by causing an accident.  However, if you injure one of your own family members in an auto accident, they can only get the state minimum $20,000 for their claim.

Here’s an example of how it works:  John Doe is driving his child to school in the morning.  He blows a stop sign and causes a terrible accident by t-boning a car driven by Mary Smith.  Mary suffers a broken leg. Tragically, John’s child is paralyzed from the waist down. 

John has insurance coverage that pays $300,000 per individual, with a total of $500,000 per incident.  He has “step-down” coverage for liability.  Mary makes a claim and collects $75,000 for her broken leg.  John can make a claim on behalf of his child here, but because he has “step-down” coverage, the most he can collect is $20,000.  If John didn’t have the “step-down” provision is his policy, his child could collect up to $300,000 (and probably would) for this claim.  That extra money could go a very long ways for a young person trying to make it through life in a wheelchair, but because John didn’t know what sort of coverage he was buying, his child will never get it.  And that is the danger in “step-down” coverage.

The experts at Bolhouse, Hofstee & McLean, P.C. know how to fight for injured claimants.  If you’ve been injured, call today for a free consultation.

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