Courts across the country struggle with the enforceability of step-down provisions. Many courts reject step-down provisions as unfair, against public policy, or as ambiguous terms that upon examination do not warrant enforcement. Other court decisions focus on the freedom to contract, and many approve the provisions based on specific language of state insurance statutes.
This Article presents a brief history of these provisions, then surveys various judicial decisions attempting to put the different rulings in context with one another. Concluding, the authors suggest decisions like the South Carolina Supreme Court’s decision in Sharmin’s case are correct because sound public policy and the reasonable expectations of an insured are not served by allowing the provisions to limit coverage.
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