Family Member Exclusion

There is a terribly mean spirited provision in all Texas auto policies. The provision excludes from coverage under an auto liability policy coverage for damages caused by a family member to a resident family member in a collision. This is called the "family member exclusion."

Example: Grandmother is driving grandchildren to day care. Grandmother negligently causes collision resulting in severe injuries to one of the grandchildren.

If the injured grandchild doesn't live in the same house as the grandmother, the grandchild can make a claim under the grandmother's liability policy for the injuries and damages suffered by the child.

BUT, if the grandchild lives with the grandmother, the family member exclusion excludes the grandchild from the right to make a claim under the policy.

The family member exclusion acts to provide immunity to the liability insurer in situations where family members who live with the driver are injured. This exclusion has terrible consequences on the youngest and most innocent passengers.

Insurance companies argue that the basis of the exclusion is to keep family members from colluding to defraud insurance carriers. For some reason, insurance companies feel that resident family members are more likely to defraud insurance companies than friends or even family members who don't live together. There are no studies or other objective indications that that family members who live together defraud insurance companies. And, in every claim, the insurance companies investigate to make sure there is no fraud in the claim.

There is no basis for this exclusion, EXCEPT to increase profits of insurance companies.

How many of you knew about this exclusion? How many of you thought that your family members who live with you would be treated the same as a stranger who you negligently injure? In fact, in my experience, insureds think that their family members will be treated BETTER, since they are paying the premiums.

This exclusion has been enforced by the Courts for years, with no basis to uphold the belief that family members are defrauding insurance companies.

In fact, in my example above -- a real case I have seen -- can anyone believe that a grandmother would collude with her 4 year old grandchild and then subject her 4 year old grandchild to serious injury or death to obtain insurance benefits???? It baffles the mind!!!

But, until we get the legislature to prohibit this exclusion, resident family members will be excluded from coverage under the policies and considered, by the insurers, as frauds.

Contact your legislator and tell them to act to prohibit the "family member exclusion."