The Family Purpose Doctrine: Why loaning your kid your car is a risky proposition

Getting a driver’s license is an American rite of passage for teenagers. Unfortunately, teenage drivers are far more likely to have accidents than more experienced drivers. Drivers 16-19 are three times more likely to be involved in a fatal car crash than drivers over twenty. Even more common among teenagers are accidents resulting in non-fatal injuries. The 16-19 age range is also far more likely to live at home and use a parent-owned car.

If a teenage driver injures someone in a car wreck, there’s likely to be an insurance claim and potentially litigation. In Georgia, an injury victim may be entitled to recover their medical expenses, lost wages, an amount for their pain and suffering, and if there was distracted or impaired driving, potentially punitive damages. The price tag can be high. And under a legal theory called “the Family Purpose Doctrine,” it may be the teenager’s parents who ultimately pay that price.

The Family Purpose Doctrine applies when five factors are met:

1. The defendant owns or controls the vehicle involved in an accident;

2. The driver who caused the accident is a family member who lives in the same household as the defendant;

3. The defendant gave the driver access to the vehicle for his or her “pleasure, comfort, or convenience”;

4. The accident occurred when the vehicle was being used for a “family purpose”; and

5. The owner had authority over the vehicle.

Considering these factors, one can easily imagine how loaning a car to (for example) a teenager home from college could lead to a claim or lawsuit against the teenager’s parents.

The practical reality is that parents will often remain liable for their teenagers’ traffic accidents until they are on their own with their own cars and their own insurance. Unfortunately, accidents involving teenage drivers tend to happen more frequently and sometimes involve extenuating circumstances (such as driver distraction or impairment) that raise the financial stakes of those accidents. The best way for parents to protect themselves from the fallout of such accidents is to maintain high insurance limits, including, to the extent financially possible, excess or umbrella coverage and high-limits uninsured/underinsured motorist coverage.