Coverage For “Residents” Of Your “Household” Under Personal Liability Insurance Policies
As this is written (June, 2015) it is high school graduation time. One phase of life is completed, and another begins. For many, the next stage involves “leaving the nest” - off to college, the military, an internship, maybe even a job, or perhaps the 2015 equivalent of hitchhiking Europe or following the Grateful Dead to discover the true meaning of life. In many instances, this involves “living” somewhere else, even if only for a temporary or indefinite period of time, but ultimately coming back “home” before deciding what to do with the rest of their lives.
What happens when, after embarking upon their adventures, they are involved in an automobile accident, or their dog bites the mailman, and a liability claim is asserted against them? When they were still in high school, you would report the matter to your auto or homeowners insurance carrier, and let the insurer deal with the situation. Does your child still have coverage once they have left home? Are you sure? Of the myriad of issues and decisions confronting a family at such times, insurance coverage is likely not at the top of the list. Unfortunately, waiting until a claim has been made is to determine whether your child is still covered under your liability insurance policies may be too late.
Personal liability insurance - the automobile and homeowners policies we buy to protect us from claims of negligence - are sold in “package” form. That is, coverage is usually purchased not just for one individual, but instead on a “family” basis.
One person, usually one of the owners of the home or vehicles in question, buys the policy and becomes the “named insured,” entitled to all of the benefits of coverage. However, for liability coverage those policies usually contain a definition of “insured” that covers not only the “named insured,” but also his or her “relatives,” provided they are “residents” of the named insured’s “household” at the time any claim arises. This is good, in that it affords coverage on an expansive basis without the necessity of listing every resident relative on the policy, but it gives rise to its own set of problems, in that such relatives can lose their coverage once they are no longer “residents” and “household,” and the definition of those terms have been the subject of considerable debate. See State Farm Mutual Automobile Insurance Co. v. Smith, 206 Va. 280, 285, 142 S.E.2d 562, 565-566 (1965) (The meaning of “resident” or “residence,” has been “a prolific source of litigation”). We predict that these problems will become more difficult, and frequent, in light of societal and demographic changes that have taken place over the past twenty-five years.
We have yet to encounter a policy in which these critical terms are defined. In absence of a specific definition, the Virginia courts will apply the “plain meaning” rule, in which the terms used therein are to be given their “ordinary and customary meaning.” Salzi v. Virginia Farm Bureau Mut. Ins. Co., 263 Va. 52, 556 S.E. 2d 758, 760 (2002). The term “relative” is relatively easy understand. However, “[t]he meaning of ‘resident’ or ‘residence,’ [has been] a prolific source of litigation ...”. State Farm Mutual Automobile Insurance Co. v. Smith, 206 Va. 280, 285, 142 S.E.2d 562, 565-566 (1965). The case law tells us that this term must be defined “in the context in which it is used” - “resident” of the named insured’s “household” - and that “[t]he word “household” denotes a settled status; a more settled or permanent status is indicated by “resident of the same household” than would be indicated by “resident of the same house or apartment.” Id. However, the real questions arise when the courts’ definition of “household” is examined.
The Supreme Court of Virginia has declared that “[t]he term ‘household’ embraces a collection of persons living together as a single group with one head under one roof, a unit of permanent and domestic character,” State Farm v. Furrow, 237 Va. 77, 80, 375 S.E. 2d 738, 740 (1989) (emphasis added), and a “collective body of persons living together within one curtilage, subsisting in, and directing their attention to a common object, the promotion of their mutual interests and social happiness. USAA v. Hensley, 251 Va. 177, 181, 465 S.E.2d 791, 794 (1996) (emphasis added). See also, Allstate Insurance Co. v. Patterson, 231, Va. 358, 344 S.E. 2d 890 (1986); Geico v. Allstate, 235 Va. 542, 369 S.E.2d 181 (1988). There would seem to be reason to question whether “ordinary” people applying the “plain meaning” of this word would think in terms of there being a single head to every “household” - an idea that would likely have been accepted without question by Jim Anderson (Robert Young’s character in the 1950s TV show Father Knows Best) or Ward Cleaver (father of Theodore “The Beaver” Cleaver in the 1960s show Leave It To Beaver) where the “father” was the unquestioned “head” of the family, but an idea that could trigger interesting discussions in today’s world as to whether families still have a single “head,” and if so, who it is. Likewise, the notion that anyone applying a “plain meaning” analysis today would use a word such as “curtilage” - or even know what the word means. (In 1987 the United States Supreme Court defined the word as “the area immediately surrounding a residence that ‘harbors the “intimate activity associated with the sanctity of a man’s home and the privacies of life.’” United States v. Dunn, 480 U.S. 294 (1987) (emphasis added)).
Fortunately, the courts have provided us with some more practical guidance. In State Farm Mut. Auto. Ins. v. Bowles, 2011 U.S. Dist. LEXIS 89953. 4-5 (W.D. Va. 2011), the court analyzed many of the past Virginia court decisions and concluded that a number of “non-dispositive factors” should be considered, including the extent to which the person seeking coverage: (1) intends to be a permanent resident of the household; (2) has regular, versus erratic contacts with the household; (3) actually stays at the residence; (4) maintains a close, or strained relationship with other members of the household; (5) pays rent, board, or otherwise contributes to household expenses or maintenance; (6) keeps personal property at the residence; (7) receives substantial mail at the residence; and (8) maintains a room or other private space in the residence. The court further noted, “[t]he regularity and quality of contacts ... are the most significant factors for determining residence in a household.”
If these are indeed the controlling factors, it is probably true that this year’s class of high school graduates will likely remain “residents” of their parents’ “households” until there is some manifestation of intent, either expressly (by some declaration of intentions) or impliedly (by actions taken), to reside elsewhere. A child who goes to college, or any similar pursuit, but maintains a room at his or her parents’ house, intends to return there (or at least has no other planned residence) upon completion of that pursuit, and does not change address for purposes of drivers’ license, voter registration, taxes, etc., probably remains a resident of the household. However, a manifestation of intent to the contrary will result in a holding that the child is not a resident of the household, and therefore not an insured. See USAA v. Hensley, 251 Va. 177, 465 S.E.2d 791 (1996) (Child left parents’ home in Saudi Arabia and lived with relatives in Virginia while attending college. He had no intention of returning the Saudi Arabia, and the court concluded he was a resident of the U.S. relatives’ household, not that of his parents); Phelps v. State Farm, 245 Va. 1, 426 S.E.2d 484 (1993) (Daughter left mother’s household to attend college after being told by mother that, once she turned 18 she was “on her own. Daughter showed no intention of ever returning. Court found she was not a resident of her mother’s household). Once such an intent is manifested, consideration should be given to obtaining separate policies of insurance for that child.
We predict that this issue will be clarified but court decisions in the not too distant future. In the meantime, it is an issue that demands the attention of Virginia families. When it appears that the child has “left the nest,” it is time him or her to obtain their own liability coverage. Sure, insurance policies are not cheap, but the expense pales in comparison to a liability claim for which there is no coverage.
 There is potential for debate with respect to stepchildren or foster children, but most policies eliminate this concern by extending the definition of “insured” to include any person under the age of twenty-one who is a resident of the named insured’s household or in the care of the named insured.
 The cases cited by the court include: See Phelps v. State Farm Mut. Auto. Ins. Co., 245 Va. 1, 426 S.E.2d 484, 9 Va. Law Rep. 713 (1993); Allstate Ins. Co. v. Patterson, 231 Va. 358, 344 S.E.2d 890, 893 (1986); State Farm Mut. Auto Ins, Co, v. Smith, 206 Va. 280, 142 S.E.2d 562, 566 (Va. 1965) overruled on other grounds by State Farm v. Jones, 238 Va. 467, 383 S.E.2d 734, 6 Va. Law Rep. 624 (Va. 1989); Farmers Insurance Exchange v. Saunders, 78 Va. Cir. 74 (2008); Dawson v. Auto-Owners Ins. Co., 2008 U.S. Dist. LEXIS 33571, 2008 WL 1836506, at *4 (W.D. Va. Apr. 23, 2008).
 Interestingly, age is not listed as a factor. There is no reason why a “child” cannot remain a resident of the parents’ household at any age.