For liability protection, the question regularly comes up who in the family should own the cars. Ask a number of lawyers and you are likely to get a number of different answers.
Note that there are generally two (or more) people who can be liable when a negligently driven vehicle injures another person or another person’s property. The driver is going to be responsible for their own negligence. This is the primary liability, and is unlimited. The owner of the car is also liable – but this liability is limited to $500,000. If the driver has their own property and bodily injury insurance coverage, then this cap is even lower. See Fla.Stats. §324.021(9).
As between spouses, my rule of thumb is that when the wealth differential or earning potential between the spouses is not too great, the principal driver of the car should own that vehicle. If one spouse owns the car and the other drives it and injures someone, then both of them are on the hook (albeit with the liability limits above as to the owner). If the driver owns the car, then only the driver has liability. Aside from the general desire not to have both spouses liable, joint liability also exposes joint assets of the spouses to claims of the injured party.
What if one spouse has most of the wealth in the family, or is the major source of income? Here, we still want the unwealthy spouse to own his or her own car, to keep liability away from the wealthier spouse. As to the wealthier spouse, since he or she will have unlimited liability as driver of his or her car, changing our general rule above to have the car owned by the less wealthy spouse yields no real benefits and exposes the less wealthy spouse to limited liability as owner. However, if the less wealthy spouse also drives the auto of the wealthier spouse from time to time, then perhaps it is worthwhile to put that vehicle in the name of the less wealthy spouse – then, if the less wealthy spouse runs over a brain surgeon who is crossing the street while driving her wealthier spouse’s car, all the liability is on the less wealthy spouse.
In almost no circumstances does it make sense, from a liability perspective, to have the automobiles owned jointly by the spouses. That guaranties joint liability to the spouses at least as to the limited liability obligations of the owner.
These are rules of thumb only – the particular facts may warrant a different conclusion. I’d be curious to hear from anyone who disagrees with the above rules of thumb – please contact me directly or through the comments below.
Of course, your automobile insurance policy with high liability coverage, and better yet an umbrella policy for extra liability insurance coverage, are the first lines of defense against these liability exposures.
Another general rule is to have any children own their own vehicles, to avoid parental liability as vehicle owner. However, this may have gift tax implications as to funding the purchase of the car, may increase premiums, and may make obtaining insurance more difficult. Note that for persons under age 18, the parent who signs their driver license application has full liability for the minor, although the full reach of that provision (Fla.Stats. §322.09) is uncertain. Therefore, some attention should be paid between which spouse signs that application – perhaps the less wealthy spouse should be the signatory, and if the child will not own the car, that spouse should also be the owner of the car.