Whether your business provides its workers with company cars or puts them in charge of delivery trucks, accidents are always a possibility. When an accident occurs, it can be a complicated matter determining where liability lies; businesses that are found responsible can end up owing millions. It's important to understand the challenges involved and to build a plan.
Employee or independent contractor?
In questions relating to employer responsibility, it is the 'principle of respondeat superior' that the law usually turns to. Translated, it simply means let the superior answer; in other words, it is the employer (the superior) who is responsible for consequences arising from actions that employees take going about their jobs. Not every worker working for a business counts as an employee, however.
Many businesses hire workers as independent contractors, not as employees. In general, a worker is legally considered an employee only if it is provable that the business withholds taxes and offers employee benefits.
Determining that a worker involved in an accident with a company vehicle was indeed an employee can dramatically raise the level of liability that the company faces.
Was the employee on the job?
When businesses provide employees with vehicles, usually, these can only be used to drive to and from work and for work-related responsibilities. Employers are responsible for accidents occurring during such permitted use of company vehicles. In an accident caused by an employee while using the company vehicle for personal purposes, the employer is usually not held responsible.
Accidental or intentional?
Employers can be held responsible for accidents that employees cause while going about their job in the company vehicle. An employee who decides to intentionally cause damage while making authorized use of the vehicle, however, is presumed to act on his own. The employer is not considered responsible, for example, when an employee, while driving the company car, intentionally gets into an informal street race, and then loses control.
Defending your business when there is an accident
It makes logical sense that responsibility for an accident caused by an employee using the company vehicle in an authorized way, should be laid at the feet of the employer. Once the courts decide to admit the basic possibility of liability, however, there is considerable work that needs to be done to determine how far responsibility runs.
Lawyers working for the injured party may assert that the employer was negligent in not offering employees refresher courses in safe driving skills, or if they skimped on maintenance. Being found at fault in these ways may add to the level of liability that the employer faces. It's important to find a lawyer with experience in handling such lawsuits.
Protecting your business with insurance
Investing in workers' compensation insurance helps cover disability payments, employee medical bills and out-of-pocket expenses for an employee injured in a company vehicle while on the job. It doesn't help with injuries sustained by third parties in such accidents, however.
A commercial liability policy that includes standard damages and compensation for pain and suffering can be crucial to insulation from such liability. These policies can be far better than workers' compensation insurance in another way. In accidents where a third-party is at fault, liability insurance compensates injured employees fully for lost earnings. Workers' compensation only offers partial compensation.
It's important to draft a sensible employee vehicle policy
Insurance can help cover expenses involved in a lawsuit brought by an accident in a company vehicle. It can greatly help in such a lawsuit, however, to prove that the company has clear policies for safe vehicle use. The following points appear in well-drafted policies:
1. Practical restrictions to make sure that company vehicles are not used for personal purposes. A list of specific uses that vehicles may not be used for.
2. Detailed information on penalties involved when rules are violated.
3. Detailed information about activities forbidden while in charge of a vehicle, including cell phone use, drug use and socializing.
If businesses often refuse to employ people who have criminal records, it is to protect themselves in the event of a lawsuit lawsuits resulting from misbehavior by employees. Should an investigation uncover a record of multiple violations and poor driving skills, an employer would find a convincing defense harder to make.
When it comes to protecting a business from liability from lawsuits arising out of accidents involving the company vehicle, an extremely conservative approach is advisable.
Declan Ashton works in the insurance industry and is able to share some knowledge with consumers when it comes to dealing with auto accidents.