We were underinsured, can we be sued?

[Mello]

What is the name of your state? California

Our 16 year old son was the driver of a car owned by us, and was at fault in a major head on collision. Our liability limits at the time were only $100,000. Four people were hospitalized, one with major injuries and an 8-day stay in the hospital. We know the medical bills will far exceed our limit. We fear that we could be sued for the overage, which could cause us to lose our home, but have also heard that there is a $15K per person, or $30K per occurance limit on what we can be held liable for. Which is correct?

 

[divgradcurl]

The former. Your insurance is only obligated to pay up to the policy limits, but you will be liable for anything above that, no matter how much that is.

15/30 is simply the minimum required liability in CA. Obviously these minimum requirements don't provide all that much protection if you should ever have a serious accident.

 

[stephenk]

Wrong. As owners of the car you are only liable up to the statutory limits of financial responsibility of $15K per person with a $30k limit.

Unless the other parties can prove negligent entrustment of the vehicle to your son, you will not liable above those stated amounts.

Now for your son, your carrier will in all probability settle those claims for the policy limit of $100k.

have you discussed your concerns with your insurance company? Who is your carrier?

 

[Crazyhorse]

Do they need to prove negligent entrustment or do they only need to prove negligence of the son? Then as a minor they would be able to hold the parents vicariously liable as the respondeat superior. Or would this only be for an intentional tort?

 

[Mello]

I am hoping this is true, but we keep getting conflicting answers. Our carrier is AAA. And no, there was no negligence involved. Although, our son had a restrictive license at the time (first 6 months driving, no passengers in the car under 20), and he neglected to follow that rule when he chose to give the other 2 boys a ride home from school. He was cited for crossing the double yellow line. There was no speeding involved, no drugs or alcohol. It was raining, and he lost traction on a curve, sliding over the line into the other vehicle. Our son's injuries were minor, with only an overnight stay in the hospital, but the bill still came to about $22K for him. One of the other boy's bills could likely be $300K (or more). Two attorneys have told us that we would be liable for the 15/30 only, but 3 others haven't even mentioned that, and think we should prepare for the worst. (Losing the house, bankruptcy, etc) What should we do? And is there anything we can do at this point to protect any of our assets?

 

[Crazyhorse]

I'm actually working on an appeal for a case almost exactly like this one for my civil procedure class.

This was a CO case and the jury was not allowed to know anything about the insurance or the limits. They found that the minor was driving negligently in that she was driving too fast for the conditions.

Of course you are going to allege that no negligence took place... but of course the other party is going to allege that it did. Good luck... and remember that you may want to consult with your own attorney if this goes to trial... CA insurance companies are notorious for leaving their insured high and dry. Read a CA case where their behavior was so egregious... that the plaintiff and defendant actually joined up to sue the defendant's insurance carrier and won an enourmous judgment. Good luck!

 

[stephenk]

Do they need to prove negligent entrustment or do they only need to prove negligence of the son? Then as a minor they would be able to hold the parents vicariously liable as the respondeat superior. Or would this only be for an intentional tort?

The mere negligence of the son does not then make the owners of the car vicariously liable. That's why I asked if a negligent entrustment argument was being made. But the facts stated by the poster do not seem to support such a claim.

The son is protected by the policy limits of $100K, the owners of the car are liable up to $30K total under the same policy.

AAA will resolve the case quickly for the policy limits of 100K. Such resolution would be in exchange for a complete of all claims against the driver and owners of the car. If the kids were covered under their own parents' policies they could also go to their own carriers and make an underinsured coverage claim (if they had the coverage).

For future reference, make sure you have as much liability and uninsured coverage as possible. If you own a home or other property you should have at minimum a 100/300K policy. If you have homeowners coverage and auto coverage with one carrier, like AAA, you can also get a $1 million umbrella policy that will basically protect you against any catastrophe. You should also homestead your property.

 

[Mello]

We have already homesteaded, and also have raised our policy limits to 300/500. I wish we would have done so sooner.
Neither of the other boys were covered under their parents' policies. Here's another question: would the other parties' personal medical insurance cover anything our auto insurance doesn't, and if so, would those insurance companies be likely to come after us for reimbursement?

 

[stephenk]

Nope. Whatever bills they incur through their own medical insurance or on a lien basis will be paid out of the settlement reached with your carrier. Remember, the kids' parents will sign a release relieving you and your son from any further liability or responsibility. The hospital has no standing to go after you or your son.