Court Decision Has Coverage Implications for ‘Accordion Families’

If you’re a parent of an adult child who lives partially at home, you might want to read about a court case decided earlier this year in California that highlights some serious insurance issues for “accordion families.”
In the case, two insurance companies—GEICO and Mercury—were duking it out over which insurer had to cover damages that Lara Edelbaum became responsible for when she crashed her mom’s car in California back in 2008. Specifically, the question was whether Lara, who was bouncing between three residences, technically “resided” with her parents at the time of the accident.
The Mercury policy Lara’s parents had bought to cover the car had said that relatives would be covered fully under the policy, but the definition of “relatives” was restricted to related individuals who resided with the policyholder. If the court found that she didn’t technically reside with her parents, then her parents’ insurer, Mercury, only had to provide a total of $35,000 worth of coverage—the minimum coverage level for auto insurance policies in California; if the court found she did reside with them, Mercury had to provide more than $500,000 worth of coverage.
This notion should be reason enough to get “accordion families”—families in which adult children come back to live with their parents—to contact their insurer and clear up the issue of whether their children will be fully covered in the event of an accident. If the complex contract language ends up showing that they’re not, the victims of a serious accident could come after the driver or their parents for compensation for damages.

​The Case

Lara Edelbaum lived in Beverly Hills with her parents until she graduated from college in 1991, and later moved back in after attending graduate school. She then moved to New York and later moved back in with her parents again in 2000. She stayed there for six years and then moved out with her new husband. She then moved back to her parents’ house again, with her husband, in 2007. After they split up later that year, a family friend let her live in a guesthouse. While living in the guesthouse, she also frequently visited New York, where she stayed at her sister’s apartment. Lara said she kept some of her belongings at each of the three locations and could not quantify how much time she spent at each.
In the end, the lower court found that Lara did technically reside with her parents and that Mercury would have to provide full coverage. “At the time of the accident, Lara was a woman in transition and had three residences,” the lower court wrote. After moving back in with her husband, “Lara never moved out fully but rather kept one foot in her parents’ home as she stayed at her sister’s in New York or the guest house.”
The appeals court that ruled on the case in April of this year said that Mercury’s policy language was ambiguous. Both interpretations of the policy were reasonable, giving the ambiguity of the contract. Mercury argued that she had to spend the majority of her time at the house to be considered a resident there; the Edelbaums contended that whether she resided at the house depended on whether she and her parents considered it her home, which they did.
The appeals court ultimately said that the evidence supported the lower court’s ruling that she was residing at her parents’ home. She gave the house as her mailing address for important documents, kept possessions there, and ran errands for her mother. Further, when she found a new fiance and moved to San Francisco, she took all of these belongings with her.

A Valuable Lesson for Parents in “Accordion Families”

​Although the situation ended up working out for the Edelbaums, this is an isolated incident with its own unique details. Every company’s insurance contract can vary, and you don’t want to be caught technically uninsured due to one sentence in fine print. If you’re a parent in an accordion family, talk to your insurer about whether your children are covered under your policy.