Are Your Company Drivers Creating Liability Risks?

Driving is a routine part of many job responsibilities, from sales representatives visiting prospects,  to delivery drivers transporting goods and even office managers going to the bakery to get a cake for employee birthday celebrations. Employees who have driving responsibilities create significant responsibility for companies to ensure that their employees are driving safely and legally when conducting company business. This article will outline the key aspects of liability when employees drive on company business, including the company's responsibility for checking driving records, insurance company responsibilities, the concept of negligent entrustment and will provide best practices for limiting liability.

Company Responsibility for Checking Driving Records

One of the fundamental responsibilities that companies have when their employees drive for business purposes is to ensure that these employees have valid driver's licenses, registrations, insurance, and clean driving records. Regularly checking driving records helps companies identify any violations or issues that may affect driving eligibility, ensuring that only qualified and safe drivers are on the road representing the company.

For example, in industries such as transportation or delivery services where driving is a core part of the job, conducting thorough driving record checks is essential. This process may include reviewing past traffic violations, accidents, and the validity of the driver's license. By implementing strict protocols for checking driving records, companies can mitigate the risk of accidents, legal liabilities, and reputational damage associated with employing drivers with poor driving histories and behaviors.

Insurance Company Responsibilities

Insurance plays a crucial role in managing the risks associated with employees driving on behalf of the company. Companies typically need to have adequate insurance coverage, such as commercial auto insurance and liability coverage, to protect against financial losses in case of accidents or injuries involving company vehicles. Additionally, a company who has employees driving personal vehicles on company business will want to be covered under a commercial auto insurance umbrella policy.

For instance, if an employee driving a personal vehicle causes a car crash that results in multiple injuries and the medical expenses exceed the employee’s personal car insurance liability limits, the business is responsible for paying the additional amount not covered. If the company has commercial umbrella insurance, the policy will cover the excess amount.

Insurance companies have responsibilities to assess risks accurately, provide appropriate coverage, and handle claims efficiently. An insurance company may list an employee of the company as an additional insured on the commercial auto or umbrella policy, but it is typically the employer's responsibility to conduct due diligence to ensure that employees meet the criteria set by the company for classification as safe drivers. It's crucial for companies to work closely with their insurance providers to understand their coverage options, policy requirements, and risk management strategies related to employee driving activities.

Negligent Entrustment

Negligent entrustment is a legal concept that holds companies liable for entrusting vehicles to employees who are unfit or unqualified to drive safely. This concept emphasizes the importance of companies assessing employees' driving records and ensuring their driving records meet the set criteria before allowing them to operate company vehicles. Failure to exercise reasonable care in entrusting vehicles can result in legal consequences and significant liabilities for companies.

For example, if a company knowingly allows an employee with a history of reckless driving to operate a company vehicle and an accident occurs as a result of that employee's negligence, the company may be held liable for negligent entrustment. To avoid such situations, companies should implement robust driver screening processes, detailed safe driving policies, provide comprehensive driver training programs, and regularly monitor and evaluate employees' driving records and on the job driving performance.

Best Practices for Mitigating Liability

To mitigate liability risks from company drivers and promote safe driving practices among employees, companies should implement these best practices:

• Create thorough job descriptions to define positions where driving is an essential function.

• Implement driving record checks during the hiring process and periodically for existing employees where driving is an essential function of their position.

• Determine the appropriate guidelines for what constitutes a safe driver and follow those guidelines when reviewing candidate and employee driving records.

• Create, implement, regularly review, and update driving policies to address emerging risks and compliance requirements.

• Provide comprehensive driver training programs that cover defensive driving techniques, safety regulations, and company driving policies.

• Enforce strict policies prohibiting alcohol and drug use while on the job and while driving and conduct regular substance abuse screenings.

• Monitor and evaluate employees' driving performance through telematics and other monitoring systems.

Conclusion

Liability when employees drive on company business encompasses various legal, financial, and reputational risks for companies. From prioritizing safety, compliance, and risk management strategies, companies checking driving records and maintaining adequate insurance coverage to preventing negligent entrustment, companies must adopt proactive measures to ensure the safety of their employees and the public while minimizing legal liabilities.