Employer Company Car Accidents & Violations: Who is Liable?

Posted on Feb 15, 2019
Employer Company Car Accidents & Violations_ Who is Liable

When employees use business vehicles for business errands, the question of liability and responsibility often arises. Who is responsible for acts of drivers in business vehicles? It’s a question some employers do not even consider until a violation, accident, property damage, or injury has occurred.

If you are one of the many employers who hasn’t considered the potential ramifications, now is the time to act.  Ultimately, the business is responsible for its business vehicles.

Protecting Your Business from Employee Drivers

Overall, it’s the responsibility of the business to ensure that all employees driving company vehicles have the necessary skills to use them, know how to operate them safely, and have specific company guidelines for operating these vehicles.

You should do the following, to protect your organization:

  • Review employee’s driving record and found no reasonable issues.
  • Verify that employee drivers have the appropriate licenses in your state.
  • Has completed a documented road test.
  • Create a company vehicle safety document and have all employee drivers sign it.
  • Verify and routinely update employee auto insurance.

These are the initial details you need to work out before allowing employees to drive business vehicles. Keep in mind, though, that while it is important for employees to have auto insurance, you must also protect your business by having sufficient coverage as well for each vehicle with the understanding that employees will be driving them.

Some insurers may have requirements of their own that must be met before providing protection for company vehicles.

What Should Your Employee Driver Vehicle Safety Document Include?

While it is essential to have a document, handbook, policy, and guidelines for employee drivers, it is equally important that the material includes specific bits of information, such as:

  • Policies related to consumption of alcoholic beverages, prescription medications, illegal substances, and/or over the counter medications that may impact their abilities to operate motor vehicles.
  • Requirements related to texting, mobile phone use, computer operation, and other distractions while driving.
  • Instructions for how and when accidents should be reported to the company.
  • Instructions for how and where vehicle usage is acceptable.
  • Policies related to who can drive company vehicles and how vehicles can be used.
  • Types of cargo and materials that can be carried in the vehicles.
  • Safety instructions for employee drivers (including policies related to speeding, aggressive driving, etc.).
  • Maintenance policies and requirements.
  • Consequences for failure to follow policies including loss of driving privileges or, potentially, even the loss of a job if driving is a major component of an employee’s responsibilities within the organization.

The policies you establish also provide important protection for your business, just as ensuring that your drivers are operating vehicles in accordance with those policies. GPS tracking for business vehicles can be a useful tool for monitoring driver actions when they are out of sight.

Why are Driver Policies so Important for Business Vehicles?

When you create policies for your drivers, that are signed by every driver on your team, and follow up with a monitoring system, like GPS tracking for your vehicles, you are showing your good faith effort to put safe drivers on the road.

This matters because ultimately, business vehicles are the responsibility of the business. If you have the right kind of insurance and follow the requirements of your insurer closely, your insurance protection will often be sufficient to protect your business, providing you have the proper amount of protection.

However, if you have drivers that consistently ignore policies and you do not take corrective measures, then your business could be found liable for the drivers’ actions and receive punitive damages far in excess of what your typical business auto policy provides.

This means you may need umbrella coverage for added protection and still may risk heavy financial penalties if an employee has an accident in a business vehicle.

Of course, the main reason to create driver policies for business vehicles is to establish expectations between your business and your employees about their conduct behind the wheel of employer-owned vehicles. The clearer your expectations are the fewer risks of accidents and injuries that can have devastating consequences for your employees and your business.

Because company vehicles are the responsibility of the business, it is important to protect the interests of your business from the start. Not only does this mean having adequate insurance protection and not relying on employee insurance to be sufficient coverage. It also means creating policies that are clear and concise about your expectations and making sure your drivers are complying with those policies.

Contact Otterstedt Insurance Agency to Learn More About Protecting Yourself

As an employer, ultimately, your company vehicle is your responsibility. That means you must have appropriate insurance coverage even when your employees are driving it.

Please call us 201-227-1800 to learn if you are adequately protected, and if not, how we can help.

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