Auto Insurance Claims: car insurance, student classification, legal implications

Question
i am 24 old .what is the different between i buy the insurance myself and covered under my father's insurance policy? if i have an accident(my fault or not my fault)?
thank you .

Answer
Dear Sai,

This appears at first to be a simple question, but as you will see, it is LOADED with legal implications, one of which has some nasty implications for your father.

First, I guess I would assume that you are living at your parents' home, or that you are an unmarried student.  Otherwise, I don't think you can obtain insurance on the car.  Be sure NOT TO LIE ABOUT YOUR SITUATION WHEN APPLYING FOR INSURANCE, since that can VOID THE POLICY, even if it is not discovered until years later when a claim is made.

The answer to liability and coverage also depends upon who is the owner of the vehicle.  If your father owns the car, and he insures it, naming you as an additional insured, then you will be covered for both liability and collision/comprehensive (to the extent of his coverage, of course).

If you own the car, your father cannot own the policy on the car unless you are still dependent or perhaps a student classification would qualify.

What happens if you own the car and insure the car?  You will be covered just the same as noted above: for liability and liability and collision/comprehensive (to the extent of your coverage, of course).

Thus, as summary of an answer to your question: it should make no difference under the policies as to whether you bought the policy or whether you are named as an additional insured under your father's policy.

BUT, WHAT IS A POTENTIAL PROBLEM, is the question of whether or not your father has exposed himself to added liability above and beyond the policy limits if he names you as an insured under his policy---OR, if you live at home, but use your car for most family errands, groceries, etc.

Let's say that you caused a terrible accident, with extensive injuries to three people, some of which are permanent disabilities.  Likely the damages are a multiple of your father's policy limits or your own policy limits.

If you had your own policy, and did not live at home or did not use the car for most family errands, then the attorney for the claimants would likely just confirm that you had no assets subject to execution outside of bankruptcy  (i.e., no big equity in a house or big investment account, etc.), and thus he would advise his injured client to just accept your policy limits in exchange for a release given to your company.  

This is called a policy limits claim, and you can read about it on my website, here:
http://www.settlementcentral.com/page0451.htm

On the other hand, let's say you are an insured under your father's policy---OR under your own policy (still living at homw), and the same thing happens.  Since you elected to insure under his policy, you have represented to the world that a special relationship exists between you, as mentioned above (i.e., you live in his house, etc.)

Thus, it is POSSIBLE (that does NOT mean probable) that the plaintiff's attorney could tag your father with liability under what is known as "The Family Car Doctrine".  THIS LIABILITY COULD EXPOSE YOUR FATHER TO LOSING HIS PERSONAL ASSETS TO SATISFY A JUDGEMENT AGAINST HIM UNDER THE FAMILY CAR DOCTRINE.  

Let's say that you were the one who drove the car for groceries and other errands on behalf of the family.  In a minority of states (like 20 or 21 only), the claimant may be able to invoke the family car doctrine to get a finding of liability against the parent.  

Thus, the plaintiff will have the opportunity to go after the assets of the parent above and beyond the policy limits of any applicable insurance policy.

This may not apply at all to your situation, but I mention it just as a caution.  Since it has succeeded in other states, why risk that they could extend that rationale in your state to include your father's situation?

The key for you will be the cost of the coverage on your own, versus under your father's ownership of the car and his policy.  Of course, it may well be that within a year or so you will be on your own, owning your own car, and thus there would be little advantage to setting up a subterfuge with your father's involvement just to save a couple of bucks for a year.

I trust that this information has been of value to you, and thus I would respectfully request that you leave me feedback on the form in this site.

Best Wishes,

Dr. Settlement, J.D.
www.SettlementCentral.Com