One attorney told me the best way to insure a teen is to put a car into an LLC and have the teen drive it. Then if something happens they cant go after everything that the parent owns in his or her name.

Is it the best way in your opinion or not? Or is it better to just have a regular NON commercial policy? But then, until the teen is 18 years old, they can go after everything the parent owns in his or her name.

What do you guys think?

Thank you

Put the car in the teen’s name.

Mary Jay
I would talk to some additional Attorney's especially ones who sue and defend auto liability claims. The veil of the LLC can be pierced by the courts in certain circumstances. It would be helpful to know how the courts have reacted in the past.

You should also calculate the costs of setting up the LLC, buying separate Business Auto policy, any additional Tax or Accounting charges. Then Compare that with adding a $5,000,000 umbrella policy to your current personal Insurance.

That does not guarantee that they will not also go after your personal assets but I makes it less likely.

Originally posted by @Wayne Brooks :

Put the car in the teen’s name.

the problem is, in my state if its a minor (under 18 years old) then a parent is legally and financially responsible if something happens

I can't imagine the LLC thing works, unless there's some way to prove that the term was driving the car as part of working for the LLC. Then... questionable at best.

I’d just get your standard auto policy, add an umbrella policy over your home/auto/rentals (great coverage for those rare ‘oh sh...’ moments) and work on teaching safe driving. Mostly don’t text/drink/smoke/do-stupid-things while driving.

Originally posted by @Mike McCarthy :

I can't imagine the LLC thing works, unless there's some way to prove that the term was driving the car as part of working for the LLC. Then... questionable at best.

I’d just get your standard auto policy, add an umbrella policy over your home/auto/rentals (great coverage for those rare ‘oh sh...’ moments) and work on teaching safe driving. Mostly don’t text/drink/smoke/do-stupid-things while driving.

 Cant they still go after your personal assets even though you have an umbrella? Lets say, umbrella does not pay because they will find some kind of exclusion clause, like a lot of insurances do... 

Originally posted by @John Mocker :

Mary Jay
I would talk to some additional Attorney's especially ones who sue and defend auto liability claims. The veil of the LLC can be pierced by the courts in certain circumstances. It would be helpful to know how the courts have reacted in the past.

You should also calculate the costs of setting up the LLC, buying separate Business Auto policy, any additional Tax or Accounting charges. Then Compare that with adding a $5,000,000 umbrella policy to your current personal Insurance.

That does not guarantee that they will not also go after your personal assets but I makes it less likely. 

Its not that easy to talk to an attorney, most attorneys want an accident to happen before they even take my call. Called few attorney

Hi Mary,

Try talking to an Asset Protection Attorney about your entire asset situation, not just the car.

Good Luck!

@Mary Jay i don’t see why an auto policy and/or umbrella policy not covering an accident. There are probably exclusions for intentional damage by the policyholder, but I’d imagine that’s rather rare. 

People get into car accidents all the time (unfortunately). It’s the reason auto policies are rather expensive, and more so in some states. 

I’m sure the Uber-rich have plans for these things- but they also probably have good insurance for their teenage drivers too! :)

Originally posted by @Mike McCarthy :

@Mary Jay i don’t see why an auto policy and/or umbrella policy not covering an accident. There are probably exclusions for intentional damage by the policyholder, but I’d imagine that’s rather rare. 

People get into car accidents all the time (unfortunately). It’s the reason auto policies are rather expensive, and more so in some states. 

I’m sure the Uber-rich have plans for these things- but they also probably have good insurance for their teenage drivers too! :)

Well, most insurances will pay upto a certain limit. May be 500K or 1mln...What if they are suing for 3 mln, or 5? Lets say in an accident someone dies, there is no monetary limit on something like that... 

Originally posted by @Scott Mac :

Hi Mary,

Try talking to an Asset Protection Attorney about your entire asset situation, not just the car.

Good Luck!

Very good idea! Thank you! Do you guys know of any asset protection attorneys on this forum? May be I could reach out to them so they would tell their opinion

There are, but you might want someone who does Arizona Law because some of this might be state specific.

For instance Texas has special laws protecting certain things a person owns.

@Mary Jay if form a LLC is it possible for the member to be under 18? There will be costs associated with opening the LLC and maintaining it. Commercial auto are always more expensive than personal auto insurance so you have to factor in the cost difference.

If the main concern is protecting assets, you can insure the personal auto up to million (some insurance companies can go up that high in their regular auto policy) and you can get umbrella for an additional 2 million or 5 million.  If those coverage are comfortable for you in term of covering your asset and income if a detrimental accident happens,then we are good.  Once your teen is 18 I would change the ownership of the car to his name right away and have him/her take their own insurance policy.

Originally posted by @Mai Vo :

@Mary Jay if form a LLC is it possible for the member to be under 18? There will be costs associated with opening the LLC and maintaining it. Commercial auto are always more expensive than personal auto insurance so you have to factor in the cost difference.

If the main concern is protecting assets, you can insure the personal auto up to million (some insurance companies can go up that high in their regular auto policy) and you can get umbrella for an additional 2 million or 5 million.  If those coverage are comfortable for you in term of covering your asset and income if a detrimental accident happens,then we are good.  Once your teen is 18 I would change the ownership of the car to his name right away and have him/her take their own insurance policy.

 Thank you so much!