Drop-Down Insurance Policies Reduce the Coverage You Pay for Without Your Knowledge
When you buy an automobile insurance policy, you expect to get the coverage you paid for. Some California insurance companies sell liability insurance with what is called a "drop down" provision that reduces the liabliity coverage in the event of a collision where your car is driven by someone other than you, the "named insured." This has the effect of taking your insurance coverage for say, $100,000 for liability coverage, and reducing that coverage to only $15,000 if you loan your car to a family member, a friend, an employee or anyone other than you or whomever is named on the policy itself as the "insured."
Insurance Companies Often Hide Drop-Down Coverage in the Fine Print of Your Policy
The first problem with this type of insurance policy is that neither the insurance company nor the insurance agent that sells you the policy take the time to explain this provision that is hidden in the fine print of the policy. You purchase an insurance policy with the coverages that you deem best for you and the insurance company secretly reduces that coverage without explaining this reduction to you, which leaves you falsely believeing that you have the coverage you wanted and have paid for. Until, of course, there is an accident and someone who is seriously injured makes a claim. You won't learn of this insurance company trick until there is a collision and a claim is made. Imagine finding out then that your $100,000 policy is suddenly reduced to $15,000. Giving you far less coverage than you were sold and paid for is nothing short of dishonest at best and fraudulent at worst.
Take the time to take a look at your insurance policy and the declaration page that explains and itemizes all of your coverages. If you have any doubt or questions, call your insurance agent or the company itself and make sure that you do not have an insurance policy with a drop down provision. If you learn that your insurance company has sold you such a policy you have three choices:
- Keep the policy as-is. At least you know that you have this coveage and you can decide if this is what you want.
- Ask that this provision be removed or that they sell you a policy without the drop down coverage. You may be charged more for a policy without this provision, but it should be your choice what coverage you have, not the insurance company.
- Change insurance companies.
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