“There may be insurance issues if a parent doesn’t formally transfer ownership of a vehicle to a grown child no longer living in the family home.”
It’s not unusual for parents to continue to lend a financial hand to grown children after they’ve moved out into the world.
Sometimes that help is benign, where the parent provides financial assistance in paying student loans or mortgages. However, there are times when that aid can have disastrous consequences. There may be issues if a parent doesn’t formally transfer ownership of a vehicle to a grown child who’s no longer living in the family home.
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WHY TRANSFER OWNERSHIP?
It’s important to protect yourself by transferring ownership of vehicles to grown children after they leave the house. Here’s why.
A personal automobile policy pro- vides two types of liability coverage:
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1. Broad coverage that follows the insured when he or she rents or borrows a car.
2. Coverage for the driver of a vehicle listed on the policy.
The problem is: These two may not be the same person. And a personal auto policy provides broad coverage only to a resident of your household related to you by blood, marriage or adoption. “Household” has been defined in the courts as the home in which the named insured on the policy primarily resides. So, homes otherwise owned or rented by the named insured don’t qualify. In the case of a child who grows up and moves out, the grown child now becomes simply a permissive operator— and has coverage only while operating the vehicles listed on the policy.
COVERAGE IN ACTION
Let’s look at a few claim situations that show how and why ownership transfer is so important:
• Example 1: Your son Max borrows a friend’s truck to move some furniture and rear-ends another vehicle, seriously injur- ing the other driver. Max has no coverage under your policy, and the truck owner’s policy has state minimum limits. The end result is that your son will be sued, along with the truck’s owner.
• Example 2: Your daughter Emily rents a vehicle while on vacation. If Emily doesn’t purchase the insurance offered, she has no coverage at all, and even if she does purchase coverage, the limits may be insufficient for any bodily injury or property damage she may cause.
• Example 3: Your son Alex is a passenger in a friend’s vehicle and the car is rear-ended, causing serious injuries to Alex. The medical payments and uninsured/underinsured motorist coverage from your policy don’t follow or apply to him.
PROTECTION FOR YOUR PRESENT AND YOUR FUTURE
You’ve taken care to review your own risk exposures and purchase limits that are adequate to protect your hard-earned nest egg. Now let’s look at your child’s risk exposures and protect his or her future earnings. We understand how to protect whom and what matters to you most. Talk with us and we’ll help you decide if transferring the ownership of your vehicle is your best option—and we’ll be there to take you through it step-by-step.
HERE TO HELP YOU TAKE THE WHEEL OF YOUR CHILDREN’S FUTURE
At NFP Corp., our solutions and expertise are matched only by our personal com- mitment to each client’s goals. We’re a leading insurance broker and consultant that provides employee benefits, property & casualty, retirement and individual private client solutions through our licensed subsidiaries and affiliates.
For more information, visit nfp.com.
