Protecting Your Family with Car Insurance: Buyer Beware

In the past, I have recommended that you review your insurance coverages, particularly your homeowner’s and car insurance, and increase them when appropriate. This blog post addresses an unexpected exclusion found in some automobile policies that actually deprive you of coverage to your injured family members under certain circumstances. At least two insurance companies have an exclusion known as a “drop down” limitation that dramatically lessens the insurance coverage available to you and your family members if another family member’s driving conduct was a cause of their injuries. This is particularly relevant as we enter the summer family vacation and driving season. Two recent cases, one by the Minnesota Court of Appeals and one by the Eighth Circuit Federal Court of Appeals[1] have both enforced a “drop down” limitation that restricts claims by injured family members to the minimum amount of coverage mandated by Minnesota law, which is $30,000 per person and $60,000 per accident. In both cases, family members were either killed or seriously injured and suffered losses far in excess of these minimum limits. I’m sure that neither of the parents who purchased the insurance ever envisioned that their own family members would be hurt by this unexpected limitation. In the Frey case, the 17 year-old son was driving a car…