If you have an adult child who you are still paying some expenses for, or they are studying in college (living either away from you or at home), you could still be held liable for any damage they cause through their own negligence.
They may even have their own car insurance, in their own name, but if your child ends up injuring someone severely and is sued and the policy limits on their car insurance are not enough to cover the judgment, you could still be held liable for damages that the policy didn't cover, depending on the circumstances.
And your car insurance or homeowner's insurance won't cover it, meaning you'd have to pay out of pocket if your child cannot.
That said, aside from car accidents, negligent and/or intentional acts that damage someone else's property or injure a third party could be covered under your homeowner's policy and an umbrella policy.
For the purposes of this article, we are talking about mostly an adult child under the age of 25 living at home or away at college. The key factors that would possibly trigger homeowner's or umbrella coverage in terms of parents having some liability for their adult child's actions are:
- Their continued financial support of the child, and/or
- That the child lives under their roof.
The car insurance issue
There may be occasions when parents of a 20-year-old reckless driver who is either still living at home or away at college may want to take steps to separate his liability from their own, like:
- Putting the car he drives in his name.
- Removing him from their auto insurance policy.
- Requiring him to buy his own insurance (they may figure also that if they make their child pay the premium, the financial pain will reform his driving habits).
When you remove a young adult driver from the family policy, you reduce the probability of a claim for property damage, first party and third party injuries, and other liabilities that may result from an accident.
It would reduce the parents' auto insurance premiums and push the liability to the child's insurance. However, if they are sued for extreme negligence and the award exceeds the policy's liability maximum, the additional award could be on your shoulders if your child doesn't have the personal resources to pay.
Your own car insurance would not cover it and, since it's auto-related, the homeowner's policy wouldn't cover it either.
Coverage explanation
The scope of coverage for minor and adult children under their parents' homeowner's policies, with respect to personal property coverage and personal liability coverage, rests on the policy definition of "insured" in the typical policy.
The definition, in pertinent part, includes relatives who are residents of the named insured's household. Children, brothers and sisters, parents and grandparents are examples.
This doesn't mean that your 40-year-old daughter who is over for dinner is covered, though, since a visitor is not a resident.
Also, the policy will cover persons under the age of 21 in the care of the named insured (such as a foster child), as well.
The next time your homeowner's or renter's policy is up for renewal, please call us and let us know if you have any grown children and what their status is in terms of living arrangements, and any financial support that you may provide them. It will help in determining who is and who is not covered in your family and household.