GRAND RAPIDS, Mich. (WOOD) — Protecting your family on the road is about more than seat belts and safe driving.

It’s also critical that you understand your auto insurance policy, especially if you carry liability coverage beyond Michigan’s required minimum. That’s because Target 8 has learned that a little known clause known as a “step down” clause could prevent your family from collecting the full payout on your policy.

“When it comes to auto insurance, step downs are the top of the list of the most dangerous things that people do not know about,” said Tom Sinas, a personal injury trial attorney with the Sinas Dramis Law Firm in Grand Rapids.

Sinas Dramis is trying to raise awareness about the use of step down provisions, which come into play only if a family member is critically injured in a crash caused by another family member.

“Who would buy an insurance policy that treats their loved ones worse than you’d treat a perfect stranger?” Sinas questioned. “Would you ever do that if you knew that’s what you were doing?”

Some states have made it illegal for insurers to insert step down clauses into policies. In the Midwest, for instance, Illinois and Wisconsin both prohibit the clauses, while Michigan, Indiana and Ohio allow them.

Cindy Ruzak wishes she had known that her policy with USAA included a step down provision.

“At the time I had no clue,” Ruzak told Target 8. “I don’t think any of us really reads through every minor thing in our insurance police.”

But that “minor thing” drastically reduced the payout Ruzak received after she was seriously injured in an accident caused by her husband.

Cindy and Jay Ruzak run a vineyard and bed and breakfast in Traverse City. But their dream life nearly ended when he briefly nodded off while behind the wheel in 2004.

“I heard him say some expletive as he instantly realized we were starting to go off the road,” Cindy Ruzak recalled. “I looked up and saw a telephone pole coming at me and I instinctively closed my eyes.”

They missed the pole, but slammed into a four-foot wide oak tree. The passenger side took the brunt of the crash, fracturing Cindy Ruzak’s neck, smashing her femur and breaking her jaw in two places, among other injuries. She spent six weeks in the hospital and three more in a wheelchair. She recovered, but never fully.

“You could argue even now … I could use more help. I can’t afford more help,” she said.

That’s even though she and her husband had $300,000 worth of liability coverage through USAA. They never collected that money because she was injured in a crash caused by her husband. The step down provision in their policy automatically cut her claim from $300,000 down to $20,000, the minimum allowed in Michigan.

The Ruzaks fought USAA in court for seven and a half years, but ultimately lost at the State Supreme Court.

While step down provisions can have a substantial effect on liability claims, they do not impact medical benefits in any way.

Whether your policy includes a step down or not, if you’re critically injured in a car accident in Michigan, you are guaranteed unlimited, lifetime medical coverage under no fault, as well as three years of lost wages.

But if you want lost wages beyond three years or a payout for “pain and suffering” and you’re hurt in a crash caused by a relative, a step down clause would automatically reduce your benefit to $20,000 per person or $40,000 per crash.

“Insurance companies have to look for opportunities to have cost controls in the policy,” explained Lori Conarton of the Insurance Institute of Michigan, which represents the industry.

Conarton pointed out that Michigan consumers already pay some of the highest premiums in the nation.

“In Michigan, with the unlimited, lifetime medical mandate that no other state requires, our insurance is expensive,” she explained. “But what they’re paying for is this Cadillac of coverage. So it’s important for all of our policyholders that companies look for way to control those costs.”

Neither Conarton nor any other industry experts Target 8 called were familiar with step down clauses before we started asking about them.

“We would have heard this from the legislature if this was a big concern,” Conarton explained. “Consumers would be calling their legislator and we would have seen legislation to try to change it. It’s being raised by a law firm who benefits from this type of coverage.”

Michigan’s insurance commissioner, who leads the Department of Insurance and Financial Services (DIFS), initially agreed to sit down with Target 8 to talk about step down clauses, but canceled after being sent some potential questions.

Patrick McPharlin sent this statement instead:

“Despite the criticisms related to step-down provisions, they are permitted by Michigan law, and Michigan courts have affirmed their legality. DIFS has advised insurers to disclose these provisions to consumers. As with all insurance products, DIFS encourages consumers to ask questions and understand their auto insurance policies. The Department also encourages consumers to shop around for the best prices and the policy that best serves their needs.”

“If insurance companies are going to sell you liability policies with step downs, they should be obligated to tell you very clearly what they are doing,” said Tom Sinas, the Grand Rapids attorney who wants Michigan to outlaw such provisions. “They shouldn’t be allowed to get away with burying language on Page 12 of a 25-page policy in eight-point font, single space that you can’t understand.”

Cindy and Jay Ruzak had no idea their policy included a step down clause, which Sinas found on page seven of their 26-page policy with USAA.

Here’s how it read verbatim:

“There is no coverage for BI (bodily injury) for which a covered person becomes legally responsible to pay a member of that covered persons’ family residing in that covered person’s household. This exclusion applies only to the extent that the limits of liability for coverage exceed $20,000 for each person or $40,000 for each accident.”

If you want to check your policy for a step down clause, Sinas advises you to go to the “liability” section and search under “exclusions.” The language would be similar to that quoted in the Ruzak’s policy.

“If you’re not happy with the coverage you’re getting or the price you’re paying, then it pays to shop around in Michigan,” advised Lori Conarton. “You’re free as a consumer to go and check out other companies but again learn about what’s in your policy, talk to your agent, shop around… because not all companies (use step downs) and all policies differ by company.”

USAA is one of five companies have been identified as using step down provisions in Michigan:

  • USAA
  • Progressive
  • Farm Bureau
  • Grange
  • Geico

As of 2014, those five companies provided insurance to 16 percent of Michigan’s auto insurance market.

Here are the companies that are not known to use step down clauses in Michigan, according to the Sinas Dramis Law Firm:

  • Auto-Owners/Home-Owners
  • Liberty Mutual
  • Citizens
  • State Farm
  • AAA
  • Allstate

“Never buy an insurance policy with a step down,” Sinas advised. “If you’re going to buy an insurance policy and you have children, or you have a spouse or you have a parent who lives with you, never buy a policy that has a step down in it.”

Sinas says he is committed to updating his blog as he learns which companies are including the provision in standard policies and which are not.