Resident-Relative Coverage: Whose Policy Applies When You Live With Family?

Published September 20, 2016 · Injury Law Basics

A 22-year-old moves back into her parents' house in Kettering after college. She drives her own car, pays her own state-minimum policy, and never thinks about her parents' insurance. Then an uninsured driver runs a red light on Far Hills Avenue and leaves her with a shattered wrist and a concussion. Her own policy has no uninsured motorist coverage. Her parents' policy has $250,000 of it.

Whether that $250,000 is available to her depends on a question that sounds simple and is not: does she "reside" in her parents' household?

The words on the policy

Nearly every Ohio auto policy defines its insureds in layers. The named insureds are the people listed on the declarations page. Then comes a second category, usually called "family member," "relative" or "resident relative," defined as a person related to the named insured by blood, marriage or adoption who is a resident of the named insured's household. Some policies add foster children and wards.

That second category is where a great deal of coverage lives, because it extends the named insureds' liability, medical payments and uninsured/underinsured motorist coverage to people who never paid a premium. In a serious-injury case, finding a household policy with high UM/UIM limits can matter more than anything else in the file. I wrote in July about finding every available policy after a crash, and household policies are at the top of the list.

When resident-relative coverage helps an injured person

You are hurt and the at-fault driver has little or no insurance. If you live with a parent, spouse or other relative whose policy carries UM/UIM coverage, you may be an insured under that policy for the crash even if you were driving your own car, riding as a passenger in someone else's car, riding a bicycle or walking. Uninsured motorist coverage typically follows the person, not the vehicle. That is good news for the many pedestrians and cyclists who are hit by underinsured drivers every year.

You are a passenger. A passenger injured by the driver of the car she is riding in, or by another driver, may have claims against both drivers' policies and against any household policy with UM/UIM or med-pay coverage. I covered the passenger's options in an earlier post.

The at-fault driver lives with someone. The flip side is just as important. If the person who hit you is 19 and living at home, his parents' policy may cover his liability as a resident relative, often with far higher limits than his own. If he borrowed the family car, the owner's policy is usually primary. We ask about the at-fault driver's household in every case.

Where the fights happen

Insurers do not deny that resident-relative coverage exists. They deny that a particular person qualifies. The disputes tend to fall into a few patterns.

"Residence" is about intent and conduct, not a mailing address. Courts look at where the person sleeps, where their belongings are, what address is on their driver's license and tax returns, whether they have a key, whether they come and go freely, and whether they intend to stay. A college student who keeps a bedroom at home and returns on breaks generally remains a resident of the parents' household. An adult child who has rented an apartment across town for three years generally does not, even if mail still arrives at the family address.

Separated spouses and blended families. A spouse who has moved out is a frequent battleground. So are step-children who split time between two homes; a child can be a resident of more than one household, and a lawyer should look for coverage in both.

Aging parents and other adults. A parent who has moved into an adult child's home is usually a resident relative. A long-term partner who is not married to the named insured usually is not, because the definition requires a relationship by blood, marriage or adoption. That gap surprises people, and it is a reason to review the policy before a crash rather than after.

The "regular use" and "other owned vehicle" exclusions. Ohio's UM/UIM statute, R.C. 3937.18(I), expressly permits insurers to exclude coverage when the insured is hurt while occupying a vehicle owned by, furnished to, or available for the regular use of a named insured or resident relative, if that vehicle is not listed on the policy. In practice this means a resident relative injured in her own unlisted car may be excluded from the household UM/UIM coverage, while the same person hurt as a pedestrian or in a friend's car is covered. Whether the exclusion applies depends on the exact policy language and the facts, and it is one of the first things we check.

Stacking. When two household policies both provide UM/UIM coverage, the natural question is whether the limits add together. R.C. 3937.18(F) allows insurers to prohibit both intrafamily and interfamily stacking, and most policies do. Which policy is primary and whether any excess coverage remains is a policy-by-policy analysis.

Why the setoff makes high household limits so valuable

Underinsured motorist coverage in Ohio is a difference coverage: your UIM limit is reduced by what the at-fault driver's liability policy pays. I walked through the arithmetic in a post on the UIM setoff earlier this year. The practical effect is that a household policy with $25,000 in UIM coverage adds nothing against a $25,000 at-fault driver, while a parent's $500,000 policy adds up to $475,000. When you are the injured resident relative, the size of the household policy is the whole ballgame.

What to bring to the consultation

When a family member calls our office after a serious crash, I ask for every auto policy in the household, not just the policy on the car involved. That includes:

• the declarations page for each vehicle, showing UM/UIM and medical payments limits;
• any umbrella policy;
• the policy of any relative the injured person lives with, including a parent, spouse, adult child or sibling;
• for a student or recently separated spouse, documents that show where the person actually lives.

We read the definitions, the exclusions and the "other insurance" clauses ourselves. Our uninsured and underinsured motorist page explains the claims process and the deadlines, including the policy notice and consent requirements that can forfeit coverage if they are missed.

What this means for you

If you live with family, you may have far more insurance protection than the card in your wallet suggests, and the person who hit you may too. Insurers will not volunteer that coverage; they will argue the relative does not live there, that the exclusion applies, or that the limits do not stack. Each of those arguments can be met with the right facts, gathered early.