Did you ever ask yourself the question, what is my responsibility for a motor vehicle accident involving family members that lives in my household?
Nevada Revised Statute (NRS) 41.440 states as follows:
Generally, a vehicle owner is not vicariously liable for accidents involving vehicle loaned to another person under circumstances of permissive use, absent a familial relationship or other theory imputed liability.
Vicarious Liability
Vicarious liability means that a person who is not present at an accident scene can be held responsible for the negligent or willful operation of a motor vehicle. NRS 41.440 imposes vicarious liability for negligent operation by an immediate member of the family.
This statute imposes vicarious liability on motor vehicle owners who allow family owned vehicles to be driven by immediate family members. The Nevada Supreme Court has even suggested that a stepfather can be an immediate family member of his wife’s an adult son.
This doctrine represents a social policy generated in response to problems involving the by widespread use of automobiles. Specifically, the increasing number of automobile collisions lead to more frequent situations in which the negligent driver was found to be judgment proof. The Family Purpose Statute, enacted in 1957, expanded on the case law imposing vicarious liability upon a vehicle owner. Although there is no legislative history indicating the Legislature’s actual purpose for enacting NRS 41.440, one can surmise that the policy considerations for its adoption was to allow an injured party, who is free of negligence, to maintain a cause of action against a financially responsible defendant, so that the injured party can be made whole and doesn’t have to rely on public assistance for his support and for payment of his medical bills.
Insurance policies provide coverage for any person using the insured motor vehicle with the express or implied permission of the named insured. Where damages caused a negligent driver exceed the limits of the owner’s liability policy, NRS 41.440 provides an additional means to make an injured party whole. (2) To encourage the owners of vehicles to exercise a greater degree of care when deciding whether to permit a financially irresponsible family member to use a family car. A family member is generally in a far better position than a mere acquaintance to determine whether another family member is competent to drove the vehicle. One thing to consider about this statute is that it makes no distinction between dependent and emancipated children, adult of otherwise. Because the statute refers to “other immediate members of a family”, the Nevada Supreme Court has concluded that a stepfather can be an “immediate member of a family”. On the other hand the Nevada Supreme court did not impose liability on brother-in law who was residing in a household because, although the brother-in-law shared the household expenses, he was not supporting the family. The court stated the at the brother-in-law was not a family member because the other members of the were not wholly or partially dependent upon him for financial support.
Auto Liability Insurance
As a practical matter I know that through my experience in trying cases involving the Family Purpose Doctrine that judges do not like to apply this statute in situations where the limits of available liability insurance are sufficient to cover the injured party’s damages. The naming of other family members as defendants in a lawsuit involves injecting unnecessary extra parties. Although judges have expressed distaste for this law (probably because they have family members that drive their vehicles), they must still give credence to Family Purpose Statute, because it is the law in the State of Nevada.
Let’s now look at how automobile liability insurance practically applies to NRS 41.440.
If you have a child living in your household that drives a vehicle that is either owned by him or by you, you as a parent have vicarious liability for any accident involving that vehicle. Most parents, who are faced with the extremely high cost of auto insurance for teenagers or persons under the age of 25, will opt to place minimum 15/30 liability coverage on the child’s vehicle. However, they do opt to carry higher limits on their own vehicles. Their rationale for this disparity in coverage is that parents are under the mistaken belief that, if their child is involved in an accident, that their own liability coverage will provide a secondary layer of protection. Insurance companies will not stretch liability coverage to provide the parents with protection under their own liability policies in this situation. So, the parents are on the hook personally for any damages above the child’s liability coverage. This is shocking to most parents, who are sued under these circumstances. Oftentimes, parents are given erroneous information from their insurance agents. The only way for parents to protect themselves is to take out enough liability coverage on the child’s car (or other vehicles available for family use) to protect their personal assets, even if this means higher premiums.
If you want to absolve yourself from vicarious liability on your children’s vehicles, the vehicle title should be put into the child’s name, and they must be emancipated and not residing in your household.
