Family Member Liable for Auto Accident?

Our named insured sold a covered auto to his grown daughter who lives next door. Unfortunately, he never told us about it when he changed the title to her name. He gave her such favorable terms that, in fact, he never thought of the transaction in terms of transfer of anything but title. The daughter has long been listed as a family operator and her relocation next door barely made a change in their living arrangements and none in the insurance exposure that he could see.

Now there has been an accident with the daughter at the wheel; the car is heavily damaged and the daughter may be liable for injuries in the other car. Do you see where we can find coverage for this insured or his daughter?

Indiana Subscriber

As lien holder on the car, the father has a financial, read insurable, interest in the car. And that would be his real interest we believe, not the fictitious amount that his “favorable terms” to his daughter might indicate.

The liability exposure is apparently all on the daughter and, as one who lives outside the named insured's household; she has no call on the coverage of the personal auto policy.

Technically, the exposure may not have changed very much and it is worth exploring how much removed from the named insured's household the daughter really is. If she only rooms next door but continues to receive her mail at her father's house, takes many of her meals there, and so on, perhaps a case could be made for her being still a member of the household. That is iffy at best, of course.

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