Auto Owner/coverage Technicial Coverage Disussion

[Milkman1265]

i've been hearing a lot of people talk about changing their car to their son/daugther's name and having them buy their own insurance so they can protect their assets.

Anyone know any technical or claim issues here?

If parent owes 2 buildings worth 2MM each total asset 4MM,

changes cars to sons name and son wrecks can other party still sue parent?
if parent was not listed and drove the car and wrecks who will they sue? parent or child?
if parent was listed?

wouldn't it just be easier to get proper coverage then doing those name switching etc...

i'm assuming age of child plays a factor here and if he is part of house hold or not?

thoughts?

 

[djs]

How old is the son?
Are the parents still driving the cars?
Anyone can be sued, the question is whether they can be held liable. If the son is self-supporting, not claimed on income taxes and over 18, then probably not, barring some other situations such as known faults with cars when transferred, but its unlikely.

If they are transferring cars just to avoid liability, a lawyer may ask a LOT of questions about that, especially if a big accident happens shortly afterwards. Not sure it would lead to legal liability, but it would lead to a hassle.

Dan

 

[Milkman1265]

child is independent but lives in same household.

there is no pending lawsuits, but protecting themselves from the future accident as the child is new driver.

parents still use the car but you know how clients are, they talk about not using it and never going to use it.

They don't want their assets to be opened up due to an accident if the fault falls on their child. But i'm not sure they are claiming him as a dependent or not.

If son is dependent, does this open up a whole new avenue for lawyers to sue the parents for being the "guardian/parent" of dependent?

 

[djs]

You are not talking about whether the parents are liable or not. There are a lot of ways they can be found liable, but the biggest issue is the hassle factor of dealing with an accident that lawyers want to pursue.

Lets look at some examples (and for the record, I am not an attorney, this is not legal advice, just my view of common sense):

Son uses car, goes and gets in accident. Son is at fault, not parents.

Parents tell son to go to the store and get some milk for dinner. Son says his brakes are bad and he doesn't want to drive the car. Parents say the store is right around the corner, do it anyway. Son gets in accident because his brakes went out. Parents (or employer, or bartender, or whoever) can be held at least partially liable since they were made aware of the situation and chose to have it ignored.

To get around this, the parents need an umbrella to protect themselves in the event of pass-thru unintentional negligent liability. Probably needed it anyway.

The real issue though is lawyers will go hunting for deep pockets to pay bills. Its what they are paid to do. If the son gets in an accident, they will look at the parents. While usually, there isn't an avenue to get there, the hassles of dealing with the lawyers wanting your bank records, phone records, asset listings, whatever they can get, is disturbing. By having an umbrella, the insurance company will step in and provide the client with legal representation.

Remember, if they move the autos to the son, their own auto policy will not cover them for this. In some situations a homeowners policy might, but not likely. You need the umbrella to pick up the dropdown coverage.

Dan

 

[Milkman1265]

What happens if the parent take the son's car now and gets into an accident.

son's policy subrogates parent's policy? or do they usually go directly to the driver's assets?

 

[CaptiveGuy]

Why can't the parents just get a $3-5M umbrella and have $1M limits on their auto as well. If the buildings are in a business name get a commercial umbrella they should be fine.

 

[bobson]

child is independent but lives in same household.

there is no pending lawsuits, but protecting themselves from the future accident as the child is new driver.

parents still use the car but you know how clients are, they talk about not using it and never going to use it.

They don't want their assets to be opened up due to an accident if the fault falls on their child. But i'm not sure they are claiming him as a dependent or not.

If son is dependent, does this open up a whole new avenue for lawyers to sue the parents for being the "guardian/parent" of dependent?

Keep the car in the parent's name until the child is truly indpendent and completely out of the house. Sell them a big umbrella policy, $5,000,000 or more. A lawyer will go after as deep of pockets as they can find.

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Why can't the parents just get a $3-5M umbrella and have $1M limits on their auto as well. If the buildings are in a business name get a commercial umbrella they should be fine.

Can you explain how you believe a commercial umbrella would provide any protection against a lawsuit based on the son's negliegence in a serious car accident?

Nobody never knows if they will be 'fine' until the dust settles.

 

[Milkman1265]

not really sure why they dont want to buy a 5MM umbrella, its only like 1k here and its cheaper than paying for son's 3k premium

 

[CaptiveGuy]

If the cars are registered individually a commercial umbrella wouldn't respond. I have clients who own properties in an LLC an have cars registered to the company for tax reasons. Either way, they just need an umbrella policy and they wouldn't need to play around with titling the car to the child.

 

[bobson]

What happens if the parent take the son's car now and gets into an accident.

son's policy subrogates parent's policy? or do they usually go directly to the driver's assets?

My understanding o the new ISO form, and the old ISO forms is that the kid's policy will respond until those limits are exhausted. At that point the parent's policy would respond.