Quite often you hear of how much it costs to raise a child. How much should be set aside and how much we should anticipate on spending in order to get him/her home from the hospital and all the way to college (not through college). For those of you who missed the Department of Agriculture’s 2008 report, it basically states that middle income families should expect to spend near $300,000.00 per child after inflation adjustments are made. Eye opening costs that parents should be aware of as they begin their new adventure, but this is not everything. As the child grows and becomes “mobile”, a whole new set of potential costs begin to emerge.
The potential liability cost is one which can be easily misunderstood, underestimated or simply over looked altogether. Risk is everywhere, but you can reduce the likelihood of dealing with potentially devastating events by understanding and easily implementing a few precautionary steps. What is proper precaution and how can we proactively protect ourselves? Let’s first understand exactly what liability is.
George E. Rejada, author of “Principles of Risk Management and Insurance”, explains liability as a type of pure risk unique in that “there is no maximum upper limit with the respect to the amount of the loss.” So what exactly does this mean and how is this applicable to you? In a nutshell, this means that if you or your child cause an accident, are found negligent, and cause bodily injury to another, both you and/or your child can be sued for any monetary amount. Let’s further explore this with an example.
The cost of having a child would be the cost of the bicycle you bought him/her as a birthday gift. The potential liability cost would be the potential damage the child could cause with the bicycle. Sounds rather harmless and for the most part we would probably dismiss the notion of risk as even being an issue. It is for this reason I find it necessary to further our example and bring to your attention a particular case working its way through the court system during the time this article was written. The case basically goes like this.
While under the supervision of her mother, four year old Juliet Breitman and her friend were racing their small bicycles (with training wheels) down a Manhattan street. During the race, Juliet ran into 87 year old Claire Menagh. Claire suffered a fractured hip and died three months later (of unrelated causes.) According to both the New York Times and BBC News, the estate of Claire Menagh sued the children, claiming they were “negligent in their operation and control of the bicycles”. The estate also sued the mothers of the children, arguing that they consented to the race. The BBC News went on to report that New York Supreme Court Judge Paul Wooten ruled that four year old Juliet could be sued as the law presumes children under age four are incapable of negligence and that “for infants above the age of four, there is no bright line rule”.
A child riding a bike is but one example of several potential liability costs families assume on a daily basis. Parents unintentionally introduce risks into their family lives each time they have their children’s friends over to play, take up a sport, or even host a birthday party. Fortunately, two simple actions can dramatically reduce this likelihood of a potentially devastating event.
First, simply be more aware of the situations and surroundings you are placing both you and your loved ones in. For example, if you are teaching your child to ride a bike, rather than learn on a busy residential sidewalk with lots of driveways and cars; teach them at an open parking lot, a high visibility green belt, or the open area of a school or park. Teaching your child to think one step ahead, be aware of his/her surroundings, and review alternative choices is a lesson which can serve them a lifetime.
Also, seriously consider an umbrella policy to supplement your homeowners/renters and auto insurance. An Umbrella policy provides coverage above that which a standard insurance policy covers and can be used to pay legal costs. In the article “Don’t Leave Home Without Your Umbrella”, AARP (www.aarp.org) explains that “Umbrella liability insurance typically provides a very broad coverage, including claims of bodily injuries or property damage caused by you or members of your household, as well as libel, slander, and defamation of character.”
By actively employing these two tactics, not only can you introduce your child(ren) to critical thinking skills, but you can also enhance your current level of liability protection many times over, thereby reducing your risk exposure.
