Can insurance companies adjust your liability limits after an accident?

Question

If a driver in an accident was found to be knowingly and voluntarily participating in either an illegal or irresponsible accident and that led to the accident (i.e. DUI, speeding, talking on the cell phone, etc...), can insurance companies lower the coverages that person has because of these actions? Do any insurance companies build this into their policies?

This applies to the accident at hand, not future policies, not future termination. Insurance companies have the right to cancel your policy at any time and if you get into an accident and get a DUI then odds are you're going to have your policy cancelled, but you were insured at the time of the accident so that accident is still covered.

For example, if i have 100/300 coverage and cause $200,000 worth of damage. A traditional policy would cover that regardless of the state of the driver at time of incident, and then may cancel you after but because you were insured at the time it will be covered. Are there companies out there who, upon hearing that the cause of the accident was a DUI on the part of their insured, would lower the liability limits to 10/50 and thus only $50,000 of the $200,000 worth of damage that was caused in the accdient is paid by the insurance company, the other $150,000 is the burden of the insured?

Answer 1

Yes, an insurance company can reduce your limits to the state minimum, and YES it will be in your policy and list the conditions in which it applies. If the change happened after you received your policy, you will have been sent an addendum.

If this is something that is happening to you, you should be thankful they are extending any sort of coverage...the majority of carriers specifically exclude illegal acts, such as criminal acts. Talking on your phone while driving is not a criminal act, however, DWI/DUI is. There is no such provision for any negligent act, otherwise, insurance companies wouldn't sell policies above state limits....every accident is a result of a negligent act.

As for your example of 100/300 and $200K in damage....100/300 doesn't apply to property damage, it applies to bodily injury per person/per occurence. You have a seperate coverage for property damage, i.e. $10K, $25K, $50K, etc.

Answer 2

I have been an agent for over 25 years and never have seen a company lower the liability limits on a policy because of an irresponsible act including DUI's. Now some companies have their own language built into the policy and there could be a company out there that would do this but like I said before I have never seen it. The only thing that I thought was off is there is a company that does this today. If you have liability limits of 100/300 and you let someone else drive your vehicle, that person only has liability limits of the minimum in your state.

Answer 3

Some car insurance companies will cancel your policy if you are in 2 or more accidents calling you a risk. (It happened to my mother's husband). Your policy will be higher. When it comes to DUI, speeding etc, the insurance company will get a copy of your record from the department of motor vehicle. It all depends on the points towards your driver's license will up your policy. Just say someone gets the speeding ticket or whatever the crime is, make sure they go to court. Some judges may just have you pay the fine without adding the points onto your license. Some may lower your fine (only if they don't lie to the judge).

Answer 4

If there is a company out there that does that, I haven't seen it. And I don't want to.

For a fact, they can't lower your coverages below the state min. I have a hard time believing any company could change your policy agreements without your permission, regardless of your driving behavior.

Answer 5

most companies (depending on the fine print) will lower their coverage and in some cases completely void it for things like DUI
if this happens you are obviously in the shite!!
however its not all bad.......... dunno if it applies in other countries but in australia( thats where i am) insurance companies have no legal right to access your driving or police records due to the privacy act, so there is absolutely no need to be truthful on your application for insurance forms, coz even if they know you've been bad in the past they cant do anything about it because they are not legally allowed to know........... lie your assss off!!!

Answer 6

iv found they can do anything they want including canceling you out...