How to Shield Parents from any Liability for College Student Driving

[SanDiegoChip]

Jurisdiction

California

Hello,

My 20 year old son is about to start his sophomore year at college. He attends a school in Central California, we live in San Diego. This year he will be living off campus at a fraternity house and will be bringing a car to school. Some friends have warned us that him having a car exposes us to liability risks if 1) he was involved in an accident and found partially or totally at fault or 2) if one of his fraternity brothers borrowed the car and gets in an accident. Apparently, it is fairly common practice for fraternity brothers to borrow each other cars. My son has been told to never loan out the car, but I can definitely see it happening without his knowledge. The title to the car he will be taking to school is currently in my name. We own it free and clear. My wife and I have all our insurance policies thru USAA with 100/300 liability on cars and a multi-million dollar umbrella policy. Friends told us we should do the following:

1. Transfer title to my son so it is officially his car. Not sure if this kind of transfer results in DMV or title fees in California.
2. Have him get his own insurance policy for himself for the car. His liability coverage could be the minimum, but I think he should set it at 50K/100K unless advised differently. Splitting him into his own policy will increase his annual car insurance premiums between $500 and $1,000 due to lack of discounts.

I was all set to do this when another friend said that it may be wasting money an exposing us to more risk. He said in some states, if a parent provides more than 50% support for a child's living expenses (which we do), they could be held liable regardless of who the car is titled to and the name on the insurance policy. He said we should keep everything as is so we would be protected by our umbrella policy. My son leaves for school next week and I need to decide what to do.

Please tell me the best way to protect my wife and I from liability. I told my son if someone "borrowed" his car and gets in an accident, he needs to report it as stolen. I am not sure he would do that to a fraternity brother. My specific questions include:

1) Should we transfer title to my son?
2) Should he get his own insurance policy? If yes, is it OK if he is also insured through USAA or should he use a different company?
3) If he gets his own policy, should my wife and I drop him from our policy at USAA? My USAA rep said that our policy covers us even if an unnamed family member was driving one of our cars with our permission. There may be a time when we are on a family vacation and we will want him to drive another car.

Please let me know if you need any additional information. Thanks in advance for any advice!
Chip

 

[army judge]

Some friends have warned us that him having a car exposes us to liability risks if 1) he was involved in an accident and found partially or totally at fault or 2) if one of his fraternity brothers borrowed the car and gets in an accident.

If he isn't on your insurance policy, should he do stupid stuff, that liability doesn't attach to you because you are related.

He should acquire his own auto insurance policy (and the car should be titled in his name ONLY) to avoid any liability attaching to you because of his naivety or stupidity.

 

[zddoodah]

Some friends have warned us that him having a car exposes us to liability risks if 1) he was involved in an accident and found partially or totally at fault or 2) if one of his fraternity brothers borrowed the car and gets in an accident.

Are any of these friends lawyers admitted to practice in California? Did any of them cite any statutory or case law by which they think a parent can be held liable in either or both of these scenarios? I suggest that you ask these friends to cite the statutory or case law that they believe supports what they tell you. When they look at you askance, ask them why they think they're competent to dispense legal information without any basis in law.

My wife and I have all our insurance policies thru [company name] with 100/300 liability on cars and a multi-million dollar umbrella policy.

Good.

Friends told us we should do the following:

1. Transfer title to my son so it is officially his car. Not sure if this kind of transfer results in DMV or title fees in California.

This is California. There's always a fee. However, a transfer without consideration will only require a minimal fee.

I was all set to do this when another friend said that it may be wasting money an exposing us to more risk. He said in some states, if a parent provides more than 50% support for a child's living expenses (which we do), they could be held liable regardless of who the car is titled to and the name on the insurance policy.

Dare I ask: who cares about "some states"? All that matters is California, and California law imposes no liability on parents for their adult children's negligence (regardless of how much financial support the parents might provide for the child.

He said we should keep everything as is so we would be protected by our umbrella policy.

What would make this friend think your umbrella policy wouldn't cover you regardless of what you do? This friend obviously isn't a lawyer. Is he an insurance agent or someone who otherwise has expertise with insurance coverage issues?

Please tell me the best way to protect my wife and I from liability.

You've already done it by carrying copious amounts of insurance.

Should we transfer title to my son?

That's not something about which an anonymous stranger on the internet should be expressing an opinion. However, I can tell you that whether you do or don't do this will have no impact on your potential liability under any scenario you've described. Unfortunately, some folks, including your presumably well-meaning friends, mistakenly believe that the owner of a car has some sort of automatic liability for any accident caused by the driver of a car. That simply isn't the case. When your son was a minor, you were vicariously liable for his negligent operation of a car, but that's no longer the case since he's now an adult (even if he is driving a car you own). The only exception would be if you knew he was an incompetent driver but allowed him to use your car anyway. In such a case you could be liable under a "negligent entrustment" theory.

Should he get his own insurance policy?

That's up to you and him. Whether you continue to cover him on your policy or he gets his own policy will have no affect on your potential liability.

If yes, is it OK if he is also insured through [company name] or should he use a different company?

3) If he gets his own policy, should my wife and I drop him from our policy at [company name]?

Makes not the slightest bit of difference.

 

[Zigner]

However, I can tell you that whether you do or don't do this will have no impact on your potential liability under any scenario you've described.

Actually, should there be some sort of problem with the insurance on the vehicle not paying, the owner of the vehicle could be found liable for up to $15,000 in California. It's a remote possibility, but a possibility nonetheless.

 

[SanDiegoChip]

Hi Army Judge, thank you so much for your quick reply. Changing title to him is super easy and cheap. We can go to our AAA office and take care of it for $15. We will start getting quotes for his own insurance policy. I think USAA has a special insurance rate for college students living more than 100 miles away from home who do not have a car with them. Since the car he is taking will be on a separate policy, he will NOT have any of our remaining family cars with him. Should we keep him on our policy in case he ever drives one of our cars, or should we drop him completely?

 

[SanDiegoChip]

zddoodah, thank you for your advice. One of the friends is a practicing attorney in CA who handles personal injury. She started this discussion by saying she did this with her sons. I wanted to get a second opinion to make sure I am not "cutting off my nose to spite my face."

You wrote: "California law imposes no liability on parents for their adult children's negligence (regardless of how much financial support the parents might provide for the child." At what age is my son considered an adult? 18? 21?

What really started this whole discussion was over a year ago we had a tragic accident involving a wrong way driver on a freeway. The driver was a millennial millionaire who was driving a very expensive (e.g., $300K car). Something happened to his business and he was losing his income stream. In hid despair he drove around the neighborhood recklessly then went the wrong way on a freeway and caused a head on collision that killed a mother and daughter (and the driver). Looked like it may have been suicide. We hear the surviving family of the victims were suing the millennial's father for many millions. The reason, when the guy bought his sports car he did not have a history of W2 income to support it. Everything was 1099 income, so his dad co-signed the loan for the car and his name was on the title. I have not followed the case and probably don't have all the facts. But this is what prompted some of us with college age kids to think about getting the cars out of our name.

 

[SanDiegoChip]

Zinger thanks for the comments. Although $15K is not chump change, I am most concerned about financially crippling liability. However, rather have ZERO liability to avoid frivolous pursuits.

 

[Zigner]

Zinger thanks for the comments. Although $15K is not chump change, I am most concerned about financially crippling liability. However, rather have ZERO liability to avoid frivolous pursuits.

Assuming there is adequate insurance on the vehicle, it really shouldn't be a problem.

EDIT: To answer your question about adulthood: It's 18 here in California.

 

[zddoodah]

At what age is my son considered an adult? 18? 21?

The age of majority in California is 18. Your 20 year old son is a legal adult.

 

[army judge]

Should we keep him on our policy in case he ever drives one of our cars, or should we drop him completely?

I have been with USAA for more years than I care to reveal.

That said, when our time arrived, as our children "aged out"; we removed them from all of our insurance polices.

This was before our version of paternalistic "federales" mandated keeping 26 year old adults on their parents' health insurance policies.

USAA is very accommodating and welcomes children and family members of USAA policy holders.

Your child, your spouse, and you are all better off by another right of passage to adulthood.

Financially, removing most mid-twenty age males (even females) will benefit you and your spouse financially, in forms other than "what if Timmy or Tammy" collided with that $500,000 Bentley.

If he drives one of your cars, his insurance will cover him.

My wife and I have never allowed anyone to drive our vehicles, even when they were younger.

We supplied each of them with safety certified "clunker" or "hoopty", when that time arrived.

That, however, is your decision to make as his parents.

 

[Zigner]

If he drives one of your cars, his insurance will cover him.

I don't necessarily disagree, but, since he resides at the same house (his temporary absence for college aside), they may need to take extra steps to make sure that all the insurance policies "play nice" with each other.

 

[SanDiegoChip]

Thank you all for such great comments! I am going offline for a bit but you all gave me a lot of great advice to consider.

 

[army judge]

I don't necessarily disagree, but, since he resides at the same house (his temporary absence for college aside), they may need to take extra steps to make sure that all the insurance policies "play nice" with each other.

Which is why we never permitted any of our children to drive any of our vehicles.

In fact, we don't allow anyone to drive any of our vehicles today.

Only you can protect yourself.


One way to do that is by saying NO to most requests.

 

[Zigner]

In fact, we don't allow anyone to drive any of our vehicles today.

You mean that your vehicles just sit there, never driven?


I'm just kidding, I know what you meant
(I think)

 

[MosheStrugano]

After reading all the above comment, I would say it is better not to allow children to drive any of the vehicles, until he/she might have good understanding.

 

[Zigner]

After reading all the above comment, I would say it is better not to allow children to drive any of the vehicles, until he/she might have good understanding.

Huh? That doesn't make sense.