Actually, I think it's mostly for self-protection. If a teacher got into an accident with a student in the car, s/he could be held personally liable, and the student could also claim that the teacher attempted molestation, if the student were malicious. And so on....
Good point. I sometimes forget that lots of kids aren't raised to be honest and forthright, and/or the parents are greedy and want to make a buck.
People get sued over that kind of thing all the time. My grandfather got hit by a lady when he was riding a bike, and her insurance company sued HIM so that they wouldn't have to pay for his medical bills, ect. HA HA That little plan backfired. They had to pay the bills, plus $10,000. He wasn't doing anything wrong, just in the wrong place, wrong time.
Unfortunately, people always threaten to sue. I know that's one reason why my teachers were always stand-offish...they didn't want to be accused of sexual harrassment or worse.