No matter how much I think I know about asset protection there is always some new risk of liability that surprises me. A client called me about his car insurance. The client had a child in college in another state. The child had a drivers license in the other state and not in Florida. The same child owned a car in the child’s own name. The child had his own car insurance with minimum liability coverage as the parent/client believed liability coverage was not important for a child with no assets. The client’s insurance agent said that his own $1m umbrella policy would not cover him unless the child raised his insurance liability limits or the child were insured under the parent’s own policy with high liability limits. This seemed illogical because the child was an adult and his ownership and operation of the car was in a totally different part of the country.
I checked the issue with two insurance agents I know in Orlando. Both told me that there is established legal decisions which can make a parent liable for the accidents of his adult child as long as the child is a legal dependent and is claimed as a tax dependent on the parent’s tax return. So, even if you are not on the title to your child’s car, and the child had his own insurance, you still could be liable for his accidents if he is your legal dependent.
Both insurance agents said that the client should raise the liability limits on his child’s separate insurance to match the parents’ liability levels in order to bring the child under the parents’ umbrella liability policy. Not knowing anything about insurance laws, I was very surprised to find another example of how creative plaintiff’s attorneys are able to convince judges to make tap into deep pocket defendants.
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