I’ve recently informed you about the new No-Fault changes, as well as how to save some money if your son or daughter takes a car to college.  But just as important, if you have an auto insurance policy with a “family step-down” provision, you may want to look at other companies!

Many companies are offering “competitive” premiums to attract business. Progressive Insurance has reportedly passed State Farm as the top insurer in Michigan. But to get their customer that competitive rate, there must be a catch. Remember, if it’s too good to be true, it probably is!

In order to give the consumer a low premium, they are taking away some coverage. Not the obvious coverage that you may see when you look on the declaration sheet when you renew your policy, but instead they remove some of your coverage that is buried in the middle of the tiny printed policy no one ever reads. In fact, many of the agents don’t even know some of these changes exist in the policies they sell! This may or may not be legal, but it is certainly deceitful.

The coverage I’m referring to, as stated above, is the “family step-down.” This provision buried in many policies reduces the liability coverage your family may be entitled to if you cause an injury accident. It takes your liability coverage down from the limit you selected to the State minimum if the injured victim is a family member.

Let’s say you have a $500,000 liability policy to protect you in case you injure someone in your vehicle. Let’s also say your 20-year-old son is driving your car, taking your younger son and his friend to school and runs a red light injuring your younger son and his friend. Your son’s friend would be able to claim up to your $500,000 liability limit for his injuries. Whereas, your younger son, even with the exact same injuries, could only collect the State minimum of $20,000 because of the family step-down. Simply because he’s related by blood. In most auto insurance policies, both injured boys would be entitled to the $500,000 if their injuries warranted that amount. The insurance company, by capping your family member at $20,000 from $500,000 is really shrinking its risk, and therefore, puts them in a position where they can lower your premium.

But think about it; is it worth it? How often are you driving with a family member in your car? If you are single, this provision may be okay. If you are elderly, it may be worth the risk. But a family of four or five, with school-aged children? The odds of you having a spouse in the car, or a child being driven to school, athletic or dance practice, perhaps, to a friend’s house… Or a family of four going to dinner or to grandma’s house? Why wouldn’t you protect your family to the same extent as you are protecting a total stranger?

Real life situation: A couple years ago I represented a small boy who was severely injured in a car accident due to his father’s negligence. The dad, the driver of the vehicle had a large policy limit of $1,500,000. Due to life-altering injuries, we were able to settle the case for 1.4 Million Dollars. Had his dad had a policy with Progressive, or another insurance company that contained the family step-down provision, we would’ve only settled his case for $20,000.00! This is how insurance companies save themselves money; keep on collecting premiums, yet, find new ways to deny claims.

Please give me a call so we can walk through your policy together. No one ever plans on getting injured in an auto accident. But you need to make sure you have the coverage you think you have, and protect family first!

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