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Household or Family Exclusion in Auto Insurance Policies a Trap to Watch out for


Auto insurance policy contracts in Maryland (and some other states) have what is commonly referred to as the household or family exclusion clause. This clause is to the effect that if a family member is injured in an auto accident as a result of the negligence of another family member, the insurance company will only pay the meaning that insurance companies are liable to pay $30,000 per person and $60,000 per accident (when more than one family member is claiming).

An actual case that our office handled a couple of years ago is illustrative of this situation. Our client, an elderly lady, was involved in a serious car accident caused by the negligence of her husband who was driving the family car and struck a tree. She was seriously injured. Her medical bills amounted to $36,500. The couple had a joint auto insurance policy with bodily injury liability coverage of $100,000 per person. Since her husband was at fault, he was not entitled to recover anything. She was entitled to claim on the policy, and she did. She requested the maximum of $100,000 to cover her medical bills and general damages (pain, suffering etc.). However, pursuant to the household exclusion clause in the policy, the insurance company paid her only $30,000.

If your auto insurance policy coverage is the state minimum of 30/60 ($30,000 per person and $60,000 per accident), you do not have to be concerned about this clause. However, if you have a policy with bodily injury liability coverage of over $30,000, you should know that unless you do something, in the event of an accident caused by a family member, any other injured family member’s compensation will be limited to $30,000.

What can you do? Fortunately, under Maryland law (since January 1, 2005), insurance companies are required to write in 10-point bold type fonts in the policy contract that the insured may request and buy a policy that covers claims made by family members in an amount equal to claims made by non-family members. This is in effect an exclusion of the family exclusion clause from the policy.

Some ignorant or unscrupulous providers (or their agents) may not specifically point this out to you. Therefore, you need to ask about it and then get the proper coverage.

Law Offices of Fogam & Associates, LLC
Telephone: 301-608-1555 or 301-252-6650

The World Building
8121 Georgia Avenue, Suite 715
Silver Spring, Maryland 20910

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