Do you know what permissive use step-down provisions are and how they can affect your accident case? Auto accident cases can be complex, and the amount you can recover for your clients can hinge on tiny details in the case itself, and also the insurance policy of the opposing party. So when our attorney-clients ask us to investigate policy limits for their cases, we know that their case may depend on what we find. What many accident victims (and some attorneys) do not know about or understand is how permissive use step-down provisions can affect your accident case.
What is a Permissive Use Driver?
An auto policy can refer to three types of insureds: a “Named Insured” (including “others” named as included drivers, such as a spouse or child), “Excluded” drivers, and “Permissive Use” drivers.
A Named Insured driver is actually listed by name on the policy and will benefit from the full policy coverage. By contrast, an Excluded Driver will not benefit from any policy coverage at all because they have been specifically excluded by name. A Permissive Use driver is someone who is not named on the policy as insured and is also not specifically excluded, but is given permission by the Named Insured to drive the insured vehicle. If the policy has a permissive use step-down provision, this situation triggers it.
What are Permissive Use Step-Down Provisions?
A policy with a Permission Use Step-Down Provision typically states that it will only provide limits up to the financial responsibility law of the state in which the accident occurs. So when an accident occurs with a Permissive Use driver and a step-down provision is implemented, the bodily injury limits are reduced to the state minimum requirements. In other words, the Permissive Use driver is not covered by the policyholder’s higher limits.
Here’s an example of the Permissive Use Step Down Provision in action: An insured and registered owner in California has bodily injury liability coverage of $100,000/$300,000 and property damage coverage of $100,000. The insured lends his/her vehicle to a friend who now becomes a Permissive Use driver.
If the policy has no Permissive Use Step-Down Provision, then the Permissive Use Driver has the same coverage as a Named Insured Driver. However, under the Permissive Use Step-Down Provision, if an accident occurs then the friend will only be covered for bodily injury liability minimum in California, which is $15,000/$30,000 and $5,000 property damage. The minimums can vary from state to state.
Why Permissive Use Step-Down Provisions Matter
Attorneys like you should watch out for these clauses because they can greatly affect your strategy for the case. Knowing that the other side has high limits leads to an appropriate strategy for the case. But if you knew ahead of time all of the details of the other party’s insurance — including whether or not a Permissive Use Step-Down provision is in effect, you would likely approach the case differently.
What Is Your Client’s Case Really Worth?
Our accident investigations are thorough, and when our attorney-clients ask us to help evaluate the coverage of a policy as part of an accident case, they need to know all of the facts. Beyond policy limits, insurance policies can hold many hidden secrets. A Permissive Use Step Down Provision is just one of them. If you are an attorney and want to fight your cases with the best information possible, call Glucroft Investigations at 866-411-8646 or use our online form to contact us. At Glucroft Investigations, Uncovering The Hidden Is What We Do.
This article is not meant to offer legal or insurance advice. For advice concerning your particular situation, please contact your appropriate legal or insurance professional.