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Williams v. GEICO – Challenging Step-Down Provisions in Auto Insurance Plans

The South Carolina Supreme Court recently in the case of Williams v. GEICO ruled that step-down provisions in auto insurance policies are contrary to the public well-being, and are therefore void.
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Why does this matter for those of us here in Florida?

Because, as our Hollywood car accident lawyers know, South Carolina had been one of a handful of states – Florida included – that allows insurers to contain a clause in their policy that lowers limits to state minimums for permissive drivers.

When certain users are granted only the state minimum coverage, as opposed to the full policy limits to which they would normally be entitled, this is called a “step-down provision.” Usually, these clauses indicate that for an insured person other than you (a relative, resident of your home, etc.), the insurer will only provide limits of up to the financial responsibility of the law in which the crash occurs.

A number of states have barred this clause, finding that it is inherently unfair that a person would receive less compensation solely on the basis of his or her relationship with the negligent party. South Carolina is now one of those states.

While Florida has yet to join the ranks, rulings such as that of the Williams v. GEICO case strengthens the position of those who seek to challenge the enforceability of such provisions.

In the Williams case, a married couple was killed in a train accident while in their personal vehicle. Both were listed as insureds on a joint policy. Their survivors sought to recover the full amount listed on their policy – $100,000 for bodily injury, which was the amount of coverage for which the couple paid. However, the insurer argued that because one of the two had been negligent for the death of the other and citing family step-down provision, $15,000 (which was the state minimum liability limit at that time) was the maximum amount recoverable.

The trial court sided with the insurer, finding the policy language unambiguous and not contrary to public policy.

However, upon review by the state supreme court, that ruling was partially reversed. The policy was not ambiguous, the court ruled. In fact, it was quite clear what the insurer intended. However, a policy that cheats an insured of coverage simply because of his or her relationship to the negligent party is inherently unfair.

This would mean a seriously injured child, sibling or spouse would not be able to recover the full policy limits, simply because he or she was hurt while riding in the car with the at-fault insured. This, the state court ruled, was unacceptable.

Although the ruling does not have a direct impact on Florida drivers and step-down policies continue to be enforced here, this decisions grants greater legal grounding on which to challenge such decisions. And this is exactly what we intend to do. Contact us today to learn more about how we can help in your case.

Freeman Injury Law — 1-800-561-7777 for a free appointment to discuss your rights.

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

More Blog Entries:
Floyd-Tunnell v. Shelter Mut. Ins. Co. – Multiple UM Policies and Partial Exclusions, Aug. 25, 2014, Hollywood Car Accident Lawyer Blog

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