Insurance question for in-laws who live with us

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Topic Author
Ollie123
Posts: 79
Joined: Mon Aug 29, 2016 11:39 am

Insurance question for in-laws who live with us

Post by Ollie123 » Wed Sep 11, 2019 11:54 am

Hello all,
Wanted to seek the collective wisdom of the board about how to handle a situation with insurance coverage.

My wife and I have a max auto insurance policy and a 1 million umbrella on top of it.

My wife's parents recently immigrated to the United States. They live with us and this is the plan for the foreseeable future (they cannot afford to live independently at the moment). My wife's sister bought my father-in-law an inexpensive used car (2017 Toyota Yaris) to use to get to/from his job. We added him to our policy at that time just because it seemed like the easiest solution.

My wife's parents have a strong desire to be "independent" in every way possible despite continuing to live with us. Coming from a country where the median salary is $200/month, the amount of money we pay for things like insurance is somewhat baffling to them. This can also lead them to be a bit...penny wise and pound foolish when it comes to certain things (insurance, diet, healthcare, etc.).

They are pushing to move to their own separate insurance policy so they can drop collision and move to the minimum legal coverage my state allows to save money. We have strongly advised them against doing this. We have offered to pay for the differential between the minimum coverage and our own. In the event of large damages that exceeds their coverage resulting in wage garnishment or anything of the sort, their plan is simply to return to their home country. I will ask that you set aside the ethics conversation for the moment. Believe me, I do not like that plan any more than you might.

We have spoken to our insurance agent. They are happy to separate the policies and did not see any issues with doing so.

My questions:
A) Is there any conceivable way in which our (my wife and I's) assets could be at risk in this circumstance, assuming there is no cross-over between vehicles (us driving his car, him driving our cars)?
B) Does the fact that they live with us (rent-free) create any additional potential problems? We have done our best to keep their assets separate from ours.
C) Does the fact that the car was previously on our policy have any potential consequences?
D) Any other considerations in this situation or potential solution we may not have thought of? What would you do in this situation? Is this worth reviewing with an attorney?

Iridium
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Re: Insurance question for in-laws who live with us

Post by Iridium » Wed Sep 11, 2019 12:57 pm

Some of these answers are state or policy depandant. So please verify with your insurance agent.
Ollie123 wrote:
Wed Sep 11, 2019 11:54 am
My questions:
A) Is there any conceivable way in which our (my wife and I's) assets could be at risk in this circumstance, assuming there is no cross-over between vehicles (us driving his car, him driving our cars)?
The only way I can see this happening is if the plaintiff can prove your in laws were acting as your agent or employee. Some states can be a bit wonky in how they define it. However, if there is no crossover, the issue won't come up in the vast majority of states.
Ollie123 wrote:
Wed Sep 11, 2019 11:54 am
B) Does the fact that they live with us (rent-free) create any additional potential problems? We have done our best to keep their assets separate from ours.
Hmm...traditionally all related adults living in a household should be listed on your home owners and umbrella to cover non-auto related liability. The homeowners would be easy. Not sure how listing them on the umbrella would work, as the umbrella would usually want an auto policy with sufficient limits. What does your agent say about non-auto related liability?
Ollie123 wrote:
Wed Sep 11, 2019 11:54 am
C) Does the fact that the car was previously on our policy have any potential consequences?
I cannot imagine how it would.
Ollie123 wrote:
Wed Sep 11, 2019 11:54 am
D) Any other considerations in this situation or potential solution we may not have thought of? What would you do in this situation? Is this worth reviewing with an attorney?
Ensure they are listed on the homeowners policy. For example, if they accidentally start a fire, you probably don't want your insurance company to sue them to recover the damages (particularly, as, all the paperwork will show that you are actually the ones sueing).

In general, I guess I would try gradually and gently get at the heart of the contradiction that they insist on independence and yet live with you (presumably rent free) because they cannot afford to stand on their own two feet. Their approach is making things more complicated and will occasionally make things more expensive. If their plan is to use you as a waystation to true independence, then they should focus their efforts on increasing income and not causing time consuming and potentially expensive complications for pseudo independence. If this is permanent, then they should understand that you are happily providing a subsidy to have the pleasure of your in laws near by, and a couple hundred bucks a year is dirt cheap, relative to the cost of plane tickets to visit them should they be forced to put their 'run back home' plan into action.

I would also see if there was a way to get my spouse involved in their health insurance and ensure they are on Medicaid or an appropriate plan. Hopefully, the US' reputation for obscenely expensive healthcare on a cash basis has made its way to their home country, so they know not to cut that corner.

Attorney seems excessive. Your insurance agent ought to be the expert on how to ensure that all your liabilities are covered.

Edit: One last thought. Who sponsored the in-laws' visa? What sort of liability could they have under a 'run back home' plan? I have no idea how all that works, but that may be the bigger problem, if they are not citizens yet.

Topic Author
Ollie123
Posts: 79
Joined: Mon Aug 29, 2016 11:39 am

Re: Insurance question for in-laws who live with us

Post by Ollie123 » Wed Sep 11, 2019 1:24 pm

Appreciate the reply. I may be overthinking this. I guess we'll need to watch out if/when we have a kid and they may be watching said kid...I think that is about the only situation I could see them acting as our "agent". The umbrella thing is a great point and I will definitely look into that. I don't believe we had to list specific individuals on our homeowner's policy...could be an oddity of my particular state/insurer. Worth checking.

And to clarify...they definitely have health insurance (ACA plan) and I'm certainly insisting that remain in place no matter what. At least right now, its free so they are fine with it. I have some guilt about that, but while we can afford them living with us just fine we certainly cannot afford $2000+/month in OOP insurance premiums. They cannot receive medicaid here until they become citizens and we are no longer their sponsors. We were hoping they could find work that would offer insurance for the ten years they need to qualify for social security, but its looking like that may not happen for reasons that are not relevant here. Cutting corners on healthcare was more a reference to avoidance of seeing the doctor for primarily financial reasons.

RE: sponsorship. We are their sponsors. To my knowledge, the only implication for that relates to them becoming a "public charge" (see above RE: medicaid - for reasons that are unclear to me but we have been repeatedly assured of...ACA plans do not count). I do not think that comes into play in any interactions between private parties. So they could in theory run up massive credit card debt and take out a 3 million dollar mortgage if they found a bank silly enough to allow it without that impacting us.
Last edited by Ollie123 on Wed Sep 11, 2019 1:29 pm, edited 1 time in total.

megabad
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Re: Insurance question for in-laws who live with us

Post by megabad » Wed Sep 11, 2019 1:28 pm

I don't understand. In my state, all members of the household would have to be listed on your insurance policy (all of them). In that case, it does no good for them to get another policy unless they move out.

Topic Author
Ollie123
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Joined: Mon Aug 29, 2016 11:39 am

Re: Insurance question for in-laws who live with us

Post by Ollie123 » Wed Sep 11, 2019 1:32 pm

megabad - Perhaps it depends on the definition of household? Certainly unrelated roommates would not be required to share a policy. We filed taxes separately just to establish they are not our dependents. This issue could be state-dependent or insurer dependent. That was actually my primary concern going into it, but the insurance agent said no problem whatsoever.

megabad
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Re: Insurance question for in-laws who live with us

Post by megabad » Wed Sep 11, 2019 1:51 pm

Ollie123 wrote:
Wed Sep 11, 2019 1:32 pm
megabad - Perhaps it depends on the definition of household? Certainly unrelated roommates would not be required to share a policy. We filed taxes separately just to establish they are not our dependents. This issue could be state-dependent or insurer dependent. That was actually my primary concern going into it, but the insurance agent said no problem whatsoever.
I guess it probably does depend on the definition of household. Unrelated roommates didn't have regularly access to my car. If they did, I think they would have to be added as well. I guess as long as parents don't have "regular access" to your vehicles, maybe you don't need to add them. But this seems to me like I would basically have to never ever let them drive my cars which wasn't an option for me (even though they have their own vehicles). My agent basically required relatives living with us to be added and gave several examples of how we could be liable if member of household was driving somewhere "at our direction" in our cars in addition to mentioning the "regular access" thing.

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Nate79
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Re: Insurance question for in-laws who live with us

Post by Nate79 » Wed Sep 11, 2019 1:57 pm

So if they want to be independent maybe they need to move out? I would not allow them to have a minimum insurance policy while living under your roof. And neither would I rely on the insurance agent to give you such critical information. Maybe research your state laws but your roof your rules.

Jack FFR1846
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Re: Insurance question for in-laws who live with us

Post by Jack FFR1846 » Wed Sep 11, 2019 2:00 pm

They would need to still be listed on your auto, home and umbrella policies as being in your household. However, they could (separately) each sign forms barring them from driving your cars, ever. Both you (policy holder) and each of them would sign forms. Each of them for each one of your cars. I have done this with both my son (high risk) and my wife (she doesn't drive a stick....reduced cost). Your insurance agent should be able to explain everything as they will have their own vehicle in their own name (I assume) with their own insurance.

If this goes without a hitch, you can never, ever, even in an emergency allow them to ever drive any of your cars. To allow this exposes you to full responsibility for any losses, minus state minimum liability coverage. In my state (Massachusetts), that's $10k.
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RickBoglehead
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Re: Insurance question for in-laws who live with us

Post by RickBoglehead » Wed Sep 11, 2019 2:01 pm

Most insurance companies allow you to name excluded drivers. So MIL and FIL can be listed on the policy as excluded drivers, can not drive the vehicles, and will not impact rates. IF they drive the vehicles and something happened, the insurance company would provide no coverage at all.
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