Some Insurance Companies Are Secretly Reducing Insurance Coverage Amounts. Let’s Stop This Misleading Practice!

Some insurance companies have recently started inserting fine print in their motor vehicle insurance policies which severely cuts down on the amount of coverage the policy provides, even though the policy specifically states a higher dollar insurance limit on the first page.  This is an underhanded way of shortchanging the customer, and everybody should stay far away from any insurance company that does this.

Shelter Insurance Company is one company that has started doing this, and I suggest that anyone who is insured with Shelter immediately switch insurance companies, making sure to vocally tell Shelter exactly why you switched companies.

So how does this trick work? Here’s an example. John Smith buys a Shelter motor vehicle liability insurance for his car that says it provides liability insurance coverage up to $100,000 per person and $200,000 per accident. Missouri law only requires $25,000 in coverage, but Mr. Smith pays good money to Shelter to get more coverage than that. Missouri insurance laws require that Mr. Smith’s policy provide insurance coverage not only to him, but also to any person he loans his car to.  So if, for example, John loans his car to someone else (whether it’s his neighbor, or a co-worker, or his brother-in-law, etc.), Missouri law requires Shelter to provide that person with coverage under Mr. Smith’s policy.

But Shelter is now burying a provision in its policies that says that for those other people, those “permissive users” who Mr. Smith loans his car to, Shelter will not provide $100,000 in insurance coverage, but will drop the insurance level all the way down to Missouri’s minimum of $25,000 per person.  In other words, even though Shelter continues to charge Mr. Smith premiums based on the $100,000 policy limits, they are only going to provide $25,000 in coverage to the driver in this situation.

Insurance companies even have an innocent-sounding name for this deceptive tactic. They call it a “step-down provision.”  In case anybody’s interested in the details, here’s the actual language of the fine print that Shelter is putting in these policies to do this:


Some individuals who qualify as an insured, qualify only because they have been given permission or general consent to use the described auto covered by this policy. The financial responsibility laws of the state require that any person who operates an automobile in the state, be covered for a specific amount of liability insurance.

Those individuals, who are covered by this policy solely because they were given permission or general consent to use the described auto, will be covered only for the minimum limits of liability insurance coverage specified by the financial responsi­bi­li­ty law applicable to the accident, unless a specific coverage states otherwise.

Even though the permissive user limit for coverage will be established at that minimum limit, other qualified insureds will continue to be provided full policy limits, subject to any limitations or exclusions present.



Step-Down Limits Statement

For persons who become insureds solely because they have permission or general consent to use the described auto, this policy provides only the limits required by the financial responsibility law. For this state, those limits are $25,000 bodily injury for each person, $50,000 bodily injury for each accident, and $10,000 property damage for each accident. (The policy defines the bold terms.)


I urge everyone who reads this to please:

(i) switch insurance companies if your policy contains this type of language.  If you’re unsure, call your insurance company and ask them if there’s a provision like this in your policy.


(ii) complain now to the Missouri Department of Insurance about this deceptive tactic.  You can very simply and easily file a complaint online at this page:

If you don’t want to   come up with your own wording about this deceptive practice, I suggest you simply copy and paste this:

I strongly urge the Missouri Department of Insurance to adopt rules forbidding insurance companies from putting so-called “step-down” provisions in their policies. These provisions mislead the insured into thinking that they and those they loan their cars to have a certain level of coverage when in fact these provisions deprive them of the amount of coverage they bought and paid for. While everyone should read their policy when they get it,   it’s unrealistic to think that the average customer will actually understand that their policy which has a $100,000 per person liability  limit on its declaration page  actually only provides $25,000 in coverage to a permissive user.   Insurance companies are getting away with providing less coverage than the declarations pages state, and it’s not fair. It shortchanges consumers and in the interest of protecting the public this  deceptive practice should be forbidden by insurance department regulations. Thank you for your attention.

Curran Law Firm thanks you for  for reading this and for taking these actions.   They help protect both you and the general public in Missouri!

If you need help with an insurance policy issue or question, please feel free to call Robert Curran at Curran Law Firm at 417-823-7500.    We are experienced insurance attorneys,  having represented both insurance companies and individuals making claims against insurance companies for many years.