Parents often ask us: (1) if their child hurts someone in a car wreck, can they be held responsible; and (2) what can they do to protect themselves against individual liability? The answer to the first question is yes, parents can be held personally liable under Tennessee's "family purpose doctrine" if their child causes a wreck while driving a family car. The answer to the second question is more difficult, but with proper planning, parents can reduce the likelihood that they will become the targets of a lawsuit arising out of an automobile accident caused by a child.
Recently, the Tennessee Supreme Court recently addressed the family purpose doctrine inStarr v. Hill, No. W2009-00524-SC-R11-CV - Filed August 31, 2011. In that case, the Court explained that the family purpose doctrine imposes vicarious liability on the owner of a vehicle for the negligent operation of the vehicle by a family member. The Court recognized that the family purpose doctrine will apply in situations where: (1) a parent furnishes a car to his or her child for the purpose of providing pleasure or comfort for the child or family; (2) at the time of an accident or injury involving the vehicle, the vehicle was being operated by the child for some family purpose or for the benefit of the family; and (3) the vehicle was being operated with the parent's permission.
The policy behind the "family purpose doctrine" appears to be to create an incentive for a parent to exercise control over a child's use of a vehicle, and to make available another "pocket" from which an injured party may collect compensation. Unfortunately for parents, Tennessee courts tend to apply the "family purpose doctrine" very liberally. The Starr Court held that the fact that a child does not live with a parent does not insulate the parent from liability if the child causes an accident while operating a vehicle furnished by the parent. Further, liability may be imposed on the parents of a child who operates a vehicle purely for the child's own use or enjoyment. It is not necessary that the child cause an accident while performing some family-specific errand or task. With respect to the requirement that a vehicle must have been used with a parent's permission, unless a parent can show some specific reason why his or her child was not authorized to use a vehicle at the time of an accident, or that the parent had absolutely no control over how the vehicle was being used by the child, liability will generally be imposed on the parent.
In order to attempt to avoid being held liable for damages caused by a child during an automobile wreck, parents may elect to take several steps to distance themselves from responsibility for the vehicle being operated by the child. First, parents could obtain separate liability insurance at appropriate coverage limits in the child's own name. (This begs the question of what is an appropriate amount of coverage? That is a discussion for you and your insurance agent.) A second way to attempt to avoid the imposition of liability on a parent for the actions of a child while driving would be to relinquish ownership of the vehicle to the child by transferring the title of the vehicle into the child's name. Third, parents could require the child to perform the upkeep on the vehicle. Fourth, parents could come to an understanding with their child that the parents are not in control of how the vehicle is to be used, and document this understanding in writing. In essence, by taking one or more of these actions, parents would be attempting to show that the responsibility for operating the vehicle at issue falls solely on the child.
If parents are not comfortable relinquishing total control of a vehicle to a child, parents should, at the very least, take steps to clearly define the manner in which their child is authorized to use a family vehicle. If a child is operating a vehicle at the time of an accident without authorization from his or her parents, it potentially creates a defense that the parents should not be held responsible. Parents should document the authorized hours of use of the vehicle, set forth how the vehicle may be used (for school, work, etc.), and have the child sign the agreement. A document is likely more credible than oral testimony in this regard, and certainly can't hurt as a secondary source of evidence of the agreement, in any event. Further steps, such as requiring the child to keep the keys in a certain place during periods of unauthorized use, might be helpful in protecting the parents from liability, not to mention providing parents some peace of mind that the vehicle will only be used with permission.
Importantly, even if some or all of these suggested actions are taken, there is no guarantee that a child's parents will be able to avoid liability. At least one Tennessee court suggested that the family purpose doctrine may still be applied to impose liability upon a child's parents -- even if the vehicle is registered in the child's name -- so long as it can be shown that the parents controlled how the vehicle was used by the child. Further, the desire to avoid liability should be balanced against other considerations that may be implicated by taking the actions suggested above. Obviously, titling a vehicle in a child's name raises the risk that a child may pawn the title or sell the vehicle for less than fair market value. Further, if a child has his or her own insurance policy relative to the vehicle, and the parents are targeted as defendants in a lawsuit arising out of an accident caused by the child, the child's insurance policy may not afford coverage to the parents, and the parents' individual policies also may not cover any claims against the parents. (These issues should be addressed with your insurance agent.)
My next blog will be on the related topic of finances and taxes of driving-age children. Until then, tell those kids to keep it in the slow lane and put the phone away!
This blog is not intended to create an attorney/client relationship or provide legal advice. Please contact the author if you have any questions or comments regarding the subject matter.