Does a non-resident child driving their parents’ car have any uninsured/underinsured motorists coverage?
Q: An insured has a 28-year-old child who lives outside the household but regularly drives their parents' car. The adult children are listed as drivers on the policy and are not considered insureds.
I understand that if they rent or borrow a car, they are not covered by the parents' policy but does a non-resident child driving their parents' car have any coverage for uninsured/underinsured motorists, as well as in situations when they are pedestrians or when they are occupying someone else's vehicle?
Response 1: Calling a 28-year-old person an “adult child" is an oxymoron. The “children" are not “family members" and lose any coverage. They are essentially permissive operators and only have coverage, including UM/UIM, while occupying a “covered auto." The parents might have a negligent entrustment exposure if the “child" causes an accident, but that's a legal question. I think it's time to cut the cord and let the child learn responsibility.
Response 2: You are giving your clients good points to consider. I have two additional thoughts for you: Document your discussions with them carefully and strongly suggest they also discuss these issues with their attorney—and repeat those warnings once per year. By doing so, you have done all you can do. They can make any choices they want—good or bad.
Response 3: Does the insurer know that those vehicles are with adult children who live elsewhere? If so, then I would agree with you that the UM/UIM will apply only when they are driving the covered vehicle. If the separate residence garage location has not been reported to the insurer, coverage could be denied.
The best solution is that the 28-year-old lists the vehicle in their own name and insures it under their own personal auto policy.
While it's unlikely that the PAP insurer will allow it, you could also request that each of the children is added as named insureds alongside their parents—and of course provide the correct garage address, which is not the same as the parents' garage address. In our experience, carriers have been willing to add adult children as named insureds when they continue to reside with their parents, but not when they move out.
Response 4: You are correct in stating that the non-resident adult child would have no liability coverage for operating a non-owned auto, such as one borrowed or rented.
For UM/UIM—if the language in your clients' policies is similar to ISO—you are correct that the adult child would have no UM/UIM when a pedestrian or when in another vehicle. Depending on the state your clients are in, the personal injury protection might not apply to relatives who do not reside in the insured's household. The bottom line is that the parents are not doing the kids any favors by keeping that vehicle on the policy.
Response 5: Although UM/UIM coverage can vary by state, every form I've seen only extends coverage for injury as a pedestrian or injury suffered in a non-owned vehicle to the named insured and their resident relatives. Once the children are no longer resident relatives, they lose coverage for being hurt in any other auto. The same is true of the medical payments coverage and personal injury protection forms I've seen.
Response 6: I've been involved in claims with out-of-the house adult children driving vehicles insured in the parent's name. The consequences have been terrible. Don't do it.
This question was originally submitted by an agent through the Big “I" Virtual University's (VU) Ask an Expert service, with responses curated from multiple VU faculty members. Answers to other coverage questions are available on the VU website. If you need help accessing the website, request login information.
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