Step-Down Provisions and Other Exclusions in Florida Auto Insurance Policies

Those who purchase car insurance in Florida are not only obeying the law, they are being responsible motorists and citizens. That said, it’s entirely possible that the coverage you think you bought isn’t actually what you have.

Our Fort Myers car accident attorneys know the problem has to do with the various exclusions and limits that often lurk in the fine print. These exclusions limit who is covered under the policy and at what times and under which circumstances. In some cases, the details are complex. The good new is that if you challenge these exclusions in court and the judge finds the language of the policy to be ambiguous, the law requires the court issue a finding in your favor. drivefastsaab

The bad news is there are still plenty of exclusions the courts have upheld. One of the most common is the “family step-down provision.” This clause caps coverage to those who would otherwise be insured (usually live-in family members) to the statutory minimum, rather than your policy limit.

Florida courts have historically upheld this clause, but there is reason to believe that could change, given the recent South Carolina Supreme Court decision in Williams v. GEICO. South Carolina too had typically ruled in favor of the insurer’s authority to limit coverage in certain circumstances. However, when the insurance company in a double fatal crash attempted to stretch the family step-down policy to include even a named insured, the state supreme court rendered the entire provision contrary to public policy, therefore ruling the contract void.

According to court records, the case  involved a husband and wife who were insured for a $100,000 liability limit under the same policy. Both were entitled to equal coverage. They were both in a vehicle one afternoon when it was struck by a train. Both died instantly. Authorities were unable to determine who was behind the wheel, but both had the same degree of coverage.

When personal representatives from their respective estates sought to collect the $100,000 liability limit, the insurer, citing the family step-down provision, indicated they would only be entitled to the statutory minimum of $15,000. The family sued.

Initially, the trial court ruled in favor of the insurer. However, the state supreme court reversed.

While acknowledging many different legal approaches to this specific issue, with no one true, clear consensus, the court indicated the ruling that seemed to make the most sense was that of the Kentucky Supreme Court in Lewis v. West American Insurance Co. in 1996. There, the court reasoned the only possible justification for the exclusion was to prevent the possibility of fraud or collusion among family members. However, this concern had been mostly abrogated by other provisions.

Instead, the effect of provisions like this is to deny adequate coverage to those who would otherwise be deserving of it, simply by virtue of their relationship to the at-fault motorists. Such a provision, the court ruled, has a tendency to injury the public and is contrary to sound policy. As such, the Kentucky Supreme Court ruled, they are unenforceable.

In Williams, the South Carolina Supreme Court wrote, “We agree with the court’s reasoning in Lewis,” and further noted that to limit the amount to which an injured party can recover based solely on a familial relationship is “arbitrary and capricious and violative of public policy.”

But again, such provisions are still recognized here in Florida. Other issues insureds have encountered include confusing uninsured/underinsured motorist coverage, no coverage for injuries resulting from drunk driving, exclusions for unlicensed drivers and exclusions for business use of a vehicle.

Because insurers will work to minimize their own liability however they can, it’s important to hire an injury lawyer with experience.

If you have been injured in an accident, contact the Hollander Law Firm at 888-751-7777 for a free and confidential consultation. There is no fee unless we win.

Additional Resources:

Williams v. GEICO, Aug. 20, 2014, South Carolina Supreme Court

More Blog Entries:

Otero v. Gomez – Third Party Lawsuit in Florida Bicycle Accident, Aug. 10, 2014, Fort Myers Car Accident Lawyer Blog