The Family Step-Down Clause: A Hidden Danger in Michigan Auto Insurance Policies
- Rabih Hamawi
- Jul 9, 2025
- 4 min read
When it comes to auto insurance in Michigan, most policyholders assume their coverage protects their family as well as it protects them. Unfortunately, a little-known provision called the family step-down clause can leave your loved ones vulnerable in the event of an accident. This clause can drastically reduce the benefits available to family members covered under your policy, often leaving them without the financial support they need during a difficult time.
In this post, we’ll break down what the family step-down clause is, why it’s so dangerous, and what you can do to protect yourself and your loved ones.
What Is the Family Step-Down Clause?
The family step-down clause is a provision in many Michigan auto insurance policies that reduces the liability coverage available for family members injured in a car accident. While your policy may state a high liability limit—such as $500,000 or more—the step-down clause reduces this limit for family members, often to the state’s minimum liability requirement.
Insurance companies include the step-down clause to limit their financial exposure. By reducing coverage for family members, insurers minimize their payouts for claims, shifting the financial burden onto the policyholder’s family.
The Impact of the Step-Down Clause
The consequences of this clause can be catastrophic. Imagine your spouse or child is seriously injured in an accident for which you’re partially at fault. Instead of receiving the full liability limits promised in your policy, their compensation is capped at a fraction of that amount. This can lead to overwhelming medical bills, lost wages, and emotional stress for your family.
How to Protect Yourself and Your Family
Understanding the risks posed by the family step-down clause is the first step in safeguarding your loved ones. Here are some actionable steps you can take:
Review Your Insurance Policy
Carefully examine your auto insurance policy for the presence of a step-down clause. Many policyholders are unaware of this provision until it’s too late. For more information on why it’s critical to review your insurance policy annually, check out our blog post: An insured must review his or her insurance policy at least annually.
Examples of a step-down clause:
“Part I – Bodily Injury and Property Damage Liability Exclusions: … excludes coverage for bodily injury or property damage to you or a resident relative. This exclusion applies only to damages in excess of the minimum limit mandated by the motor vehicle financial responsibility law of Michigan…”
Or,
“Coverage under this Part I, … 12. bodily injury to you or a relative. This exclusion applies only to damages in excess of the minimum limit mandated by the motor vehicle financial responsibility law of Michigan.”
Talk to Your Insurance Agent
Speak with your insurance agent to clarify the details of your policy. Ask specifically about the family step-down clause and whether it applies to your coverage. If your policy includes this clause, explore options to eliminate it or switch to a provider that does not include it.
Consider Umbrella Insurance
An umbrella insurance policy can provide an extra layer of liability protection. While it may not directly override the step-down clause, it can help cover costs that exceed your auto insurance limits.
Consult with an Experienced Insurance Attorney
If you or a loved one has been affected by the family step-down clause, it’s essential to seek legal advice. As an attorney specializing in insurance coverage, I have extensive experience helping policyholders navigate disputes with insurance companies and recover the compensation they deserve.
A Real-Life Example: How Families Are Affected
The impact of the family step-down clause can be devastating, often catching policyholders by surprise during some of their most vulnerable moments. Below is a real-life example that illustrates the financial and emotional toll this clause can take—and the importance of taking proactive steps to protect your loved ones.
Case Study: A Family Devastated by Medical Bills
A Michigan father was involved in an at-fault accident that injured his teenage daughter. Despite having $500,000 in liability coverage, the family step-down clause reduced the payout to just $250,000, the state required minimum. The family faced mounting medical bills and emotional strain as they struggled to cover the remaining costs.
Why This Issue Matters
The family step-down clause highlights the importance of understanding your insurance policy and advocating for fair coverage. For Michigan residents, this clause poses a unique risk, as the state’s minimum liability requirements are usually not enough. Ensuring your family is adequately protected requires diligence and, in many cases, professional guidance.
Protect Your Family Today
Don’t let the family step-down clause catch you off guard. Take proactive steps to protect your loved ones by reviewing your insurance policy, discussing your coverage with your agent, and considering additional protection options. If you have questions or need expert guidance, the Law Office of Rabih Hamawi is here to help. We are committed to assisting Michigan families in navigating complex insurance issues and ensuring their rights are protected.
Explore more insights and valuable resources on our website, including our related blog post: Car Fire Safety: How to Prevent Fire in Your Car. Your family’s safety and financial well-being are too important to leave to chance. Take action today to safeguard their future.
If your insurance company has denied, delayed, or underpaid your insurance claim, contact Law Office of Rabih Hamawi for a case evaluation at (248) 905-1133 or www.hamawilaw.com.
Who is Rabih Hamawi?
Attorney & Counselor
Rabih Hamawi is a principal at the Law Office of Rabih Hamawi, P.C. and focuses his practice on representing policyholders in fire, property damage, and insurance-coverage disputes against insurance companies and in errors-and-omissions cases against insurance agents. He may be reached at (248) 905-1133.