Personal Auto Policy - Teen Driver and Title Issues

[jimmyr1978]

One of my larger CL clients has me handle his personal lines - I'm not a personal lines person, so I need help from those with more experience than me.

The insured has a teen driver in the household with some major driving issues, including three at-fault accidents during the past year and two speeding tickets. We are now excluding the teen driver from the family auto policy that covers the insured, his wife, and another child at college. To avoid having the family policy and umbrella non-renewed, the teen driver now has a stand alone policy with a captive agency (Shelter, I believe), as even Progressive priced the teen driver policy at $7,000/year for liability only. They were our only market to even quote.

Here's the issue...the auto the teen drives is still titled in the insured's name. If the teen driver is involved in a catastrophic accident: 1) Would the family policy provide defense if my insured is named in a suit since he is on the title; 2) If we titled the car in the teen's name, would that take care of the issue?

In my opinion, since the teen driver is specifically excluded via endorsement, there would be no coverage under the auto policy in case of an accident. The umbrella would follow form and exclude coverage as well. Therefore, my client is assuming an uninsured risk, and a big one at that. My client has very deep pockets, and is leaving himself open to some major potential issues. Depending on how a claim would be handled against my insured, perhaps the homeowners would even pick it up if there were some sort of vicarious liability for allowing the teen to continue driving?

On a side note, my first and strongest recommendation was to have the teen driver turn in his drivers license to the state and sell his car. However, he attends a private school with no public transportation, so someone would have to transport him everyday. Supposedly, he is only allowed to drive the car to and from school, but what 17 year old listens to such rules? Now, I can only advise how my client can cover his own liability, if it's possible.

[Big Dog]

Rule number one in personal auto insurance - coverage follows the vehicle.

Second, this parent needs to wise up. This kid's either going to severely hurt themselves or someone else unless the parents take drastic action. Buy him a bicycle or skateboard.

[CSRQueen]

Here in PA, even if Poppa's name isn't on the title, if Junior is a resident relative, Poppa's on the hook for it. (Heck, even if the kid ISN"T a resident relative, if it can be proven that Junior is financially dependent on Poppa, which I'm sure he is, Poppa's still in the hot seat). Exclusions are only as good as the paper they're written - if this kid causes an accident Poppa's gonna pay no matter whose name is on the car as long as that kid's in the household and/or relies on him for financial support.

First, I'd get your client a very large personal umbrella. Then, I'd have a very frank conversation with him and let him know all that he's worked for can get blown away by his irresponsible kid.

[jimmyr1978]

Here in PA, even if Poppa's name isn't on the title, if Junior is a resident relative, Poppa's on the hook for it. (Heck, even if the kid ISN"T a resident relative, if it can be proven that Junior is financially dependent on Poppa, which I'm sure he is, Poppa's still in the hot seat). Exclusions are only as good as the paper they're written - if this kid causes an accident Poppa's gonna pay no matter whose name is on the car as long as that kid's in the household and/or relies on him for financial support.

First, I'd get your client a very large personal umbrella. Then, I'd have a very frank conversation with him and let him know all that he's worked for can get blown away by his irresponsible kid.

We have a $10 million umbrella, but that won't cover his assets. I'm going to write a letter stating that it is our opinion he will be uninsured in the case of a loss caused by the teen's driving.

We are recommending titling the auto in the teen's name, and installing a tracking program to monitor speed, driving radius, etc. If the kid is going to drive, at least do some risk management. That's all I can control.

[kevinraz]

I had the same issue when I was doing PL. Resident minor relative = parents still liable. Even if the auto is titled in the kids name the parents will still get brought in ESPECIALLY if they have deep pockets.

At least he is smart enough to separate his PL and CL. So many of our large commercial clients wanted all of their personal autos covered under the commercial policy.

On a side note: private school, rich dad, kid with poor driving record and parents won't do what is necessary to keep the kid and others from harm. Money does not buy wisdom nor happiness.

[plins]

You need a signed driver exclusion form for the umbrella policy as well.

The auto form is most likely only going to exclude coverage if he's driving one of the listed cars; NOT any excess exposure this client faces if son only carries minimum liability on his own policy. Because he's a dependent resident relative they have exposure.

[wrxnut25]

I don't think a signed exclusion would be necessary for the PUP, most PUPs contain an exclusion stating that coverage doesn't apply to any driver excluded on the underlying auto policy.

You probably can't say this to your client, but as a parent, he needs to teach his son personal responsibility. That means, if he wants to drive, he needs to pay for the costs of the vehicle, maintenance, and insurance himself, that way, he is responsible for the increased cost to insure himself due to his reckless driving habits. If I were him, and the vehicle was in my name, and I was well-heeled as he apparently is, I'd put my son up in the dorms, take the car away since it's in my name, and hopefully teach him a valuable lesson before he hurts himself or someone else.

I'll step down off my soapbox now!

[jimmyr1978]

You need a signed driver exclusion form for the umbrella policy as well.

The auto form is most likely only going to exclude coverage if he's driving one of the listed cars; NOT any excess exposure this client faces if son only carries minimum liability on his own policy. Because he's a dependent resident relative they have exposure.

I have told my client, in my opinion, he will have NO coverage if he is brought in a suit involving his son's driving. There could be coverage, depending on the circumstances, but the umbrella is follow form, so no need to get the driver exclusion there. I have it in writing, saved to the account, three separate times instructing him that this is an uninsured risk. I have saved an email of the insured acknowledging that this is an uninsured risk. In fact, I saved an email with the recommendation stating that the kid should turn in his license and stop driving. This ticking time-bomb is not going to be on my shoulders!

[captive no more]

Since this family obviously has some bucks, I would pull all vehicles from the kid and hire a cab or car service to take him to & from school. Put some bucks ($30-40K) in an account for him with the deal that if he complies with not driving ANY vehicle until he turns 18, the $$$ is his to buy a car in HIS name alone. Or at 18, the car he had been driving will be titled to him. But in the meantime, he CAN NOT drive any vehicle the family owns.

[Bob Lake]

What state does your client have his home and business?

[sacman]

Normally you would want to have the owner of the vehicle listed as the named insured on the policy.
I see three options for you that would add some protection for the father, but not eliminate it.

The quickest fix is to transfer the title of the vehicle into the son's name.
This adds a level of protetction for the father, but any good trial lawyer will probably pull the father into a lawsuit because of his deep pockets and the son is still a legal resident of the family home. Doing this will hopefully take the fathers name out of a relatively minor claim and keep a gold digger from trying for a lottery type payout.

Another option is to add the fathers name as an additional insured on the policy.
We do this quite often, usually when a non resident relative ( grandparent ) purchases a car for someone else.
This is about as easy as listing a lienholder on a policy and should not affect the premium at all.

The third, and probably the best, option is to issue the auto policy in the fathers name then have the son as a listed driver. Assuming the fathers record is clean, it could actually even lower the premium. Double check with the family's auto carrier and make sure that they just want to make sure the kid has insurance on his car elsewhere, They may require the son be listed as the named insured on his policy. If so, use either of the other two options.

Very wise decision to document your conversations/emails. Not only are you covering your rear end, but you are giving valuable advice to your client. Job well done.