The Big “I” Virtual University (VU) "Ask an Expert" service often receives questions about the insurance ramifications of an insured’s recommendation from an attorney, estate planner or other non-insurance professional. Such advice can frequently create a coverage gap that is penny wise but pound foolish.
Recently, VU experts responded to a post from a lawyer on an online insurance message board with advice from an attorney to put their 17year-old son on his own auto policy and, if possible, title the vehicle in the son's name. In an attempt to insulate the parents' assets from claims against the son who presumably has no assets, the experts replied that this is a bad idea for several reasons.
The attorney's response was, "You may think it's silly, but it is very good advice, which is meant to protect dad from being liable for his teenage son's accidents. From a social point of view, if you feel dad should be more responsible and ensure his son is fully insured, I understand your point. A lawyer's job is to protect his client, not protect the world."
But in many cases, the father isn’t fully insulated from liability. Because this lawyer is almost certainly ignorant of auto policy coverages, the chances are good that his recommendation just removed dad's coverage under his own policy if he is sued—no defense, no indemnity.
The attorney is probably thinking of parental liability or family purpose doctrine and statutes when considering the basis for claims against the parents. But accountability could fall on the father as the owner of the vehicle for negligent entrustment, under direct liability for negligent maintenance or other legal bases.
Situations like this drive home the point that insurance is not a commodity and the value an independent agent brings to the relationship.
To learn how ISO standard auto policy comes into play, see “Insurance vs. Legal Advice” on the VU. For more examples of the independent agent advantage, including how you are strategically positioned to outsell the competition from the standpoint of markets, products, coverage adequacy and claims advocacy, register for next week’s webinar: Competing with Direct Sales & Captive Agency Insurers in Personal (and Commercial) Lines.