Household member liabiity

What is the name of your state (only U.S. law)? Hawaii, My daughter got a DUI, she is 23 and has her own policy with State Farm. My wife and I also have our insurance with State Farm. State Farm informed us that our coverage will be cancelled unless my daughter pays $2800 per year for insurance. Is this legal? If she decides to quit driving, State Farm says our insurance will still be cancelled unless we provide proof she no longer lives with us. Is this legal? If she does decide to pay the $2800 and get a policy through State Farm, how do we protect ourselves from liability from accidents she may incur? Having her own policy does us no good, according to State Farm, as long as she lives with us we could be liable

Why hassle with them? Get quotes from other companies. As far as protecting yourself from liability for her actions-under what theory are you expecting someone could come after you?
If you are worried she'll get in an accident and need medical treatment she can't afford, you can either require her to purchase it as a condition of living at home or simply buy it for her.

Her insurance is going to be expensive now no matter who it's with. That's what a DUI does.

Although you could be named in a suit if she causes an accident, the chances of you actually being found liable are pretty slim, if you do not own the car she was driving. But the cheapest/easiest way to get the most protection is to get an umbrella policy on your homeowners policy. For very little money, you get $1million in liability coverage after your auto coverage is exhausted, and it protects everyone in the household. It also covers other types of liability claims like homeowner claims.