Your Personal Auto Insurance Policy

There have been two recent Supreme Court cases regarding automobile insurance.  These cases involve “step-down clauses.”  Since 1997, car insurance companies have been permitted to include “step-down clauses” in your automobile insurance policy.  Unfortunately no one, even most insurance agents/brokers to whom we have spoken, know these clauses are in their automobile insurance policy.  Basically, these “step-down clauses” limit the effect of uninsured/underinsured motorist coverage to the “named insureds” on the policy.

For instance, if your child has an automobile and is severely injured by a drunk driver, your child would be limited to whatever coverages exist in the policy in which he was a “named insured.”  Normally, younger drivers cannot afford adequate coverage and, thus, are underinsured.  If your child is a “named insured” under your policy, they can make claim on your underinsured motorist coverage you selected which, presumably, would have higher limits (if you own a home, you should have at least $300,000 single limit coverage).  Up until the late 90’s when these “step-down clauses” were inserted in these policies, this added protection was commonly used to fully compensate persons injured in motor vehicle accidents.  Unfortunately, most people have no idea their policy coverages are reduced.  Many people have suffered as a result.  Obviously, the insurance companies did not reduce premiums, even though they reduced the coverage in their policies.

We strongly suggest you contact your insurance agent and ask them to include your children and resident relatives as “named insureds” on your automobile insurance policy.  If you drive a corporate car, or a car owned by another, you should confirm your employer has named you as a “named insured” under the corporate automobile insurance policy.  Otherwise, you have no uninsured/underinsured motorist protection under the policy on the corporate car you drive.

If you have any questions regarding the above, or other insurance-related issues, please feel free to call our office.

© 2017 by Kearns Duffy & Vaccaro, P.C.

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