Brokers who want to cover “dependent” college students living at home by attaching an endorsement on the parents’ auto insurance policy should take a second look at a recent Alberta court case.
The Alberta courts recently ruled that a “dependent relative” should be determined based primarily on financial support.
As a college student in 2006, Erin Lee Hindley earned $10,000 of income while living at home during her college studies. Because her financial means, including a $5,000 student loan, exceeded that of her mother’s financial support, she cannot recover money for her injuries in an auto accident under her mother’s auto insurance policy, an Alberta court has ruled.
The mother’s policy contains an endorsement, SEF 44, which says the insurer will cover injuries that a “dependent relative” sustains in a crash with an underinsured motorist.
“The court must be satisfied that the plaintiff [Hindley], because of full time attendance at college, is, chiefly or for the most part, dependent upon the named insured [Hindley’s mother] for financial support,” the court ruled. “Principally, or chiefly, or for the most part must mean greater than 50%.”
The mother contributed between $9,000 and $9,995, the court found, whereas Hindley earned income of $10,134.00 and drew on a $5,000 student loan.
“[The daughter’s] earnings alone exceed the best case scenario put forth by [Hindley] as the value of her mother’s contributions,” the court found. “I find that [Hindley] has failed to prove that she was principally dependent upon her mother for financial support.”
