Legal Blog

Step-Down Provisions

Attorney David I. Fuchs


Attorney David I. Fuchs


Oct. 10, 2014


Car Accident Law

A recent ruling from the South Carolina Supreme Court may be changing the way that insurance limits are provided and determined in the case of auto accidents, Florida car accident attorneys report. The ruling, which has determined that the “step-down” provision included in some auto insurance policies does not provide insured and injured parties with fair benefits and compensation in the event of an accident, could have a far-reaching impact on other states, including Florida, that currently allow this provision in their laws. 

In Williams v. GEICO, a married couple was killed in an accident involving their car and a train, and the survivors of the estate sought to recover the full amount of insurance coverage as listed on the couple’s joint policy. Originally, the insurance company argued against this, and refused to provide the full amount for one spouse, because of the driver’s negligence, which contributed to the accident, and caused the death of the other. Citing the family step-down provision currently allowed in South Carolina, the insurance provider offered recovery of the state minimum liability at the time of the case. 

However, the South Carolina Supreme Court ruled that the couple’s surviving relatives were entitled to the full amount of the policy provisions, because the language of the policy made the insured parties’ intentions clear. To use the step-down provision would cheat the insured party of his coverage, because of his relationship to the negligent person who had caused the accident. The court ruled that this decision would mean a seriously injured spouse, child, sibling, or relation who was included on an insurance policy would be denied full recovery amounts, if they were related to or covered by the driver at fault. 

Florida and South Carolina are two of a handful of states with a “step-down” insurance provision in their auto policy laws. With step-down insurance, a policyholder is granted a clause in his or her policy that lowers the insurance limits to state minimums for permitted drivers. In these cases, the permissive users listed on the policy are only allowed the state’s minimum coverage instead of the full policy limits to which an insured driver is entitled. This “step-down” provision allows a policyholder to list other drivers such as relatives, tenants in their home, etc., as insured, without forcing the insurance company to be fully financially responsible for that person. 

Several states have banned insurance companies from offering the step-down provision, based on the assertion that it is unfair to give a person less compensation solely based on his or her relationship to the party at fault. South Carolina’s Supreme Court ruling has instituted a similar ban in their state, and policyholders with step-down insurance will be forced to change their coverages. 

Florida has yet to ban step-down provisions within their insurance policies, but this ruling may raise the issue in the state courts again. Although South Carolina’s ban does not have an immediate impact on Florida’s laws, car accident attorneys in Florida say that the ruling could be used to raise the topic, and influence cases in the state that argue against the step-down provision’s constitutionality. 

At David I. Fuchs, Injury & Accident Lawyer, P.A., our Florida car accident attorneys are up-to-date on changes to state and federal laws regarding car accidents and insurance coverage and liability. If you have questions regarding your case, contact David Fuchs today.