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April 16, 2019
Fleet safety policies have been receiving especially close scrutiny by insurers over the last few years. You may have even had your fleet safety policy reviewed and recommendations submitted by your auto insurer. This increased attention on driving safety is a result of higher costs facing insurers due to increasingly expensive automobile accidents. More and more vehicles contain high-cost parts (such as proximity sensors), medical costs for injured occupants are increasing, and distracted driving definitely is not helping reduce accident rates in our constantly connected world.
One key item insurers are reviewing in written fleet safety policies is whether systems are in place to ensure only qualified employees are driving on the company’s behalf. Drivers must be licensed, have the necessary skills, and have an acceptable driving history to avoid negligent entrustment. Negligent entrustment refers to entrusting someone with a company vehicle, or company driving duties in a personal vehicle, and the entrusted party negligently causes injury, loss, or harm to another party.
But what kinds of companies actually have this exposure, you may ask? Many employers don’t hire professional drivers, but they do hire employees who need to drive in order to complete other tasks. You don’t have to be a professional driver in a long-haul truck, or a delivery driver in a box truck for it to count as driving for the company. Sales staff driving to a client’s facility or dropping off a package for work at the post office qualifies as driving on the company’s behalf.
Many employers wonder how it affects their liability when employees drive their personal vehicles instead of driving a company owned vehicle. In this case, the employee’s personal vehicle insurance policy provides the primary coverage. However, if the limits on that policy are exhausted, the additional costs roll up to the employer’s policy. And in cases of negligent entrustment, the employer is named specifically. Take the following cases as examples of those who should not have been approved to drive on company business1:
Simply stated, negligent entrustment is allowing someone to drive who is unqualified. It means that you as a business owner are liable for what you should have known about your drivers.
Following these steps can help protect you against negligent entrustment:
Employers are able to obtain MVRs for their drivers directly from the state in which they operate, or through a third-party vendor. Using a vendor can ease the process of obtaining records from multiple states, especially when dealing with a large employee group. Some states, and most vendors, also provide a “watch,” or alert service, which notifies you more frequently than the minimum annual review standards require, allowing you to take more timely action and hopefully prevent further escalation. Note that some states require release forms to be signed by employees prior to obtaining these records.
Negligent entrustment is a serious risk when a good fleet safety program is not in place. However, having a standardized process in place for the hiring, training, and ongoing managing of those who drive on company business greatly reduces this risk. If you need guidance on developing your fleet safety program, contact an experienced risk manager or insurance broker to learn about ways to mitigate this risk.
The views and opinions expressed within are those of the author(s) and do not necessarily reflect the official policy or position of Parker, Smith & Feek. While every effort has been taken in compiling this information to ensure that its contents are totally accurate, neither the publisher nor the author can accept liability for any inaccuracies or changed circumstances of any information herein or for the consequences of any reliance placed upon it.