Avoid Negligent Entrustment Lawsuit

Automobile accidents are an expensive liability for companies that rely on the use of vehicles for their business. That risk has increased in recent years, mainly due to distracted driving and a legal concept called negligent entrustment.

Negligent entrustment occurs when an employer is held liable for negligence in choosing an employee to operate a dangerous instrument, usually a vehicle. An employer can be found negligent if both of the following situations occur:

  1. A driver becomes injured while driving for company business, causes injury to a third party or damages physical property.
  2. The employer knew, or should have known, not to trust the vehicle to the driver or that the vehicle was unsafe.

If a driver is working within the scope of his or her job duties and has permission to use a company vehicle, it is presumed that the employer has trusted the driver with the vehicle. The following can be used to prove a finding of negligence:

  • An investigation of the accident scene
  • Interviews with the drivers and witnesses
  • Other applicable evidence that includes citations issued to the drivers

Companies must be able to show that they took all possible precautions to prevent accidents. If not, the actions they did or did not take might be construed as negligent entrustment.

Liability Coverage is Not Sufficient

General liability policies do not offer coverage for incidents of negligent entrustment. Although business auto policies do not exclude negligent entrustment, coverage may not be sufficient if an employee is involved in a harmful accident. Juries often award the plaintiff punitive damages in excess of any compensatory damages resulting from negligent entrustment.

How to Avoid Negligent Entrustment

Reduce exposure to negligent entrustment lawsuits by adhering to the following best practices:

  • Prescreen all individuals granted permission to drive for company business. Review their driving records annually.
  • Provide regularly scheduled driver reviews and comprehensive training sessions.
  • Maintain company vehicles to ensure that they meet strict safety standards.
  • Provide post-accident reviews and training on how the accident could have been avoided.
  • Put clear safety policies in writing to minimize risks. Follow all OSHA guidelines as well as guidelines specific to your business.
  • Define your permission policy. Anyone with permission to drive a vehicle for company business is classified as an insured on a company policy. That is why it is important to define your permission policy in a way that ensures flexibility but isn’t too broad.
  • Regularly enforce drug and alcohol policies.
  • Enforce a zero tolerance policy for driver misconduct.

By taking the aforementioned precautions, you’ll minimize the risk of your employees creating a situation in which your company is found liable. Although commercial auto insurance can minimize some liability risks, more advanced business and umbrella policies can protect against additional risks.

Vanner Insurance Agency can help you choose an auto insurance policy that is best for your business. Contact us for more information on how you can reduce your risk of negligent entrustment liability.