<p>I just returned from coffee with a friend who had a scary story. I wanted to check it out with those of you who may have more experience in this arena.</p>
<p>Basically, three years ago our friend’s then 19-year-old son was at fault in an accident. The car was his, in his name, but the insurance was a family policy. He lived with them and continues to live with them. There seemed at the time to be no serious injuries. </p>
<p>The woman he hit is a nutcase. She refused to cooperate with his insurance company, never submitted medical bills, never responded to the calls of the adjuster, obtained a lawyer, and has sued my friend as well as her son, claiming severe injury. This case will be heard next summer in our Superior Court. </p>
<p>My friend is getting a lawyer and doing all she can. (Her insurance company even hired a private investigator.) </p>
<p>She advised me to NEVER have a family policy. She said this grief could have been avoided if her son had a separate policy, because they could not have come after her. She had thought his ownership of the car would be sufficient protection, but apparently the mere fact of sharing a policy gives huge legal exposure to the parents. </p>
<p>I’m ready to call our insurance broker in the morning, but I was wondering if anyone out there had any thoughts on the issue. </p>
<p>1) Is it better protection to have a separate policy for our adult children who live with us?</p>
<p>2) Are we still exposed if the policy is separate, the car is owned by them, but we claim them as dependents?</p>
<p>It is indeed cleaner if each party has own policy. Our S has his policy in VA. D has her policy in CA. We have a policy for H and me in HI. Each kid has title to own car In respective state. If there is a claim against any one of the cars or people in a joint policy, the rates go up for all. Anyone injured can make a claim against the policy. Any accidents or tickets by any insured raises the policy rates. </p>
<p>Younger drivers can get lower rates sometimes if they are added to the family policy instead of their own policy, but as your friend learned, there is a risk in the joint policy.</p>
<p>If the policy were in the son’s name couldn’t the “nutcase” have sued the son instead (still causing a legal nightmare only now just for the son and not for the rest of the family)?</p>
<p>There is a price savings to the ‘child’ who has auto insurance with the family policy. Depending on the state, the savings maybe considerable. My husband looked into the cost of having a separate policy and the savings of the family policy was considerable. YMMV.
Insurance always should be considered in light of the ratio of cost to benefit.</p>
<p>These facts don’t make sense. Your friend is probably being sued on a negligent supervision or similar theory, and not because the policy was in her name. (I am an attorney for an insurance company). The insurance company should provide an attorney to represent both your friend and her son, but if they have low limits and have assets it is advisable to hire a personal attorney as well.</p>
<p>It is my understanding that one should always have an umbrella policy in an amount equal to one’s total assets, in case of incidents such as these (and more). If you are going to call your agent tomorrow, ask him/her about an umbrella policy versus separate auto coverage.</p>
<p>Yes, the ability to sue has nothing to do with the insurance policy. Having your name on a policy does not cause your liability to be greater than it otherwise would have been.</p>
<p>Tyberius, my friend actually has a really good policy with a lot of coverage with a well-known insurance company. In addition, she has an umbrella policy with total coverage worth much more than her assets. The insurance company did hire an attorney, but she has had difficulty reaching him, and this is making her very nervous. She was informed of the court date but is unsure of what the charges actually are, and she can’t get an answer. I did suggest she at least consult with a personal attorney, on the thought that the insurance company might somehow be protecting their own skin but throw her under the bus (if that happens? I really am only guessing)</p>
<p>I’m still trying to figure out how she could be sued, when the other party absolutely refused to cooperate with the insurance company when they tried to settle.</p>
<p>Tyberius, how might someone “negligently supervise” a 19 year old?</p>
<p>It can get very confusing who actually is insured under any auto insurance policy…who is a named insured, who is just an insured, who is an interest holder, who is an additional insured, etc. I read once that an auto insurance policy can be more difficult to understand than Einstein’s Theory of Relativity. Unfortunately, I don’t think all insurance agents, nor all insurance underwriters fully understand insurance policies fully either which potentially can leave insurance customers exposed to uninsured financial loss.</p>
<p>If your friend is being sued she should have been served personally with a copy of the complaint. That would set forth the theory of liability against her. The facts alleged may not be true, but that doesn’t stop an action from going forward. As for negligently supervising a 19 year old, if he lived with her they could allege that he had a habit of driving after drinking or using drugs and that she had a responsibility to prevent him from driving. I am not suggesting that the plaintiff will prevail on that theory, but unless they incorrectly allege that your friend rather than her son owned the vehicle I don’t know what the theory of liability would be. </p>
<p>If you friend is not comfortable with the attorney the insurer retained, she should complain to the insurance company. If the attorney is an employee of the insurance company (a lot of insurers have their own law firms) she should demand an independent attorney. </p>
<p>Good for her for having an umbrella policy.</p>
<p>This is a really good point. She was never served with anything, just told by her insurance company to appear in court. I wonder if the suit is actually against the insurance company and they want her and her son as a witness? </p>
<p>Is it possible for the insurance company to be served papers and not the person named in the suit?</p>
<p>No substances were involved in the accident.</p>
<p>“She advised me to NEVER have a family policy. She said this grief could have been avoided if her son had a separate policy, because they could not have come after her. She had thought his ownership of the car would be sufficient protection, but apparently the mere fact of sharing a policy gives huge legal exposure to the parents.”</p>
<p>My understanding is that if a car is registered at a home, the homeowners can sometimes be liable, even if the car is owned by another individual on his own policy. When I lived with my parents, I had my car - as in, titled in my name - registered at their house, and my insurance policy - as in, I was the only person on it - had to have the same limits as my parents’ policy. Sayeth the insurance company that had their home, cars, and umbrella policies.</p>
<p>I don’t know why the mom is hiring an atty. That’s why you have insurance. the company is supposed to provide the atty. </p>
<p>As for family members living in one home…I think it could be very pricey for everyone to have their own policies. Instead, I have a $1M umbrella liability policy that would come into play for something like this. The cost is quite reasonable - we have home, auto and this umbrella policy all thru the same company. </p>
<p>However, if adult kids are living on their own, especially in other states, separate policies are probably required (I’m not talking about students).</p>
<p>I have an umbrella policy for H and me. Our kids have their own policies. Our kids have been advised by us to have higher policy limits, especially if they are choosing not to get umbrellas (few assets at this time). I purchase and renew D’s policy and S handles his own, so am not sure about his coverage. </p>
<p>I would call my auto insurer and ask them for an update and tell them that I am concerned and upset at not being kept informed about the status of the case. </p>
<p>If this woman friend has auto coverage, as does her S and also umbrella coverage, can’t see how they can be “thrown under the bus.”</p>
<p>The people I know who sell umbrellas are always saying, “you don’t have to have a lot of money to lose a lot of money.” They think just about everybody should have an umbrella, they say that it is a myth that only people with big assets need umbrellas-- but of course they sell them, so they would say that. When you get sued does the judge really sit and make sure you have enough money to pay before they award money to the plaintiff? It doesn’t seem like it would work that way. I have customers that have gotten sued who sure didn’t have the assets to pay.</p>
<p>I don’t have an umbrella myself but have been considering getting one.</p>
<p>This is what we learned from the recent conversation with our (independent) insurance agent.
In WA, a dependent kid cannot have a separate auto policy if the kid lives at the same address as the parents (being away at college does not matter unless the kid owns the car and registers it at the college address).
To have a $1M umbrella insurance, one has to have a minimum of $1M in auto liability (per accident), because otherwise the insurance co views this as shifting responsibility from one insurance to the other.</p>
<p>Insurance companies have all the angles covered to cover themselves! Requiring $1 million of underlying insurance to issue a $1 million dollar umbrella liability policy is funny. Of course insurance companies know how to work numbers…they’ll even sell a life insurance policy to a dead person as long as the premium for the life insurance policy exceeds face amount of life policy.</p>