Responsible parents make their children prove they’re ready to operate a
vehicle when they get their license. In the same way, companies need to ensure
their employees are prepared to drive safely before they hand over the keys.
“Permitting someone to use a vehicle for
company business without checking his or
her driving competency can lead to a claim
of negligent entrustment,” says Mitchell
Maddox, risk control manager at Westfield
Insurance. “An injured third party can take
legal action against the company for not
exercising reasonable care in checking the
experience, driving record, training, prior
accidents or license of the driver.”
Smart Business asked Maddox about
preventing negligent vehicle entrustment.
What are the consequences of negligent
vehicle entrustment?
Negligent entrustment claims have been
increasing in frequency and can result in
multimillion-dollar lawsuits. These settlements not only require payment for damages and injuries caused by the accident,
but can also result in punitive damages for
not assigning duties responsibly. Companies need to proactively avoid this situation to prevent a potentially dramatic negative effect on their bottom line. Most
importantly, developing and implementing
effective fleet safety programs can prevent
the pain and suffering caused by accidents.
What types of situations could lead to negligent entrustment?
Allowing a person to operate a company
vehicle, as well as use of a personal vehicle
for business purposes, could lead to a negligent entrustment claim.
For example, a service representative operating a company van stops after his last
service call for dinner and drinks. He gets
into an accident on the way home and seriously injures another party. After the accident, investigators discover that the driver
has a suspended license from a prior DUI.
The company had not run a motor vehicle
record (MVR) or required the driver to
report violations, so the court rules negligent entrustment against the company.
Other possible scenarios may involve:
- Company-owned vehicles and pool cars
- Delivery vehicles
- Personal vehicles used regularly for
company business, such as outside sales - Personal vehicles used occasionally for
company business, such as going to the
bank or picking up mail - Rental vehicles employed for company
business - Vehicles loaned to others, such as security guards or temporary employees
- Use of company vehicles by nonemployees
How can employers check for problems during the hiring process?
Employers are responsible for ensuring a
driver is competent and skilled to perform
expected tasks. Lack of action by the employer may be the link to establishing negligent entrustment, so businesses should
start the evaluation immediately. Here are
some hiring best practices that should be
done prior to allowing driving privileges:
- Require a list of all driving violations or
accidents for the past five years. - Include with the application a waiver
authorizing the employer to obtain MVRs
on a periodic basis. - Verify and make a copy of the individual’s driver’s license. Require a license from
the state where the job is located. - Obtain a current MVR covering the past
five years and review against established
company standards. - If candidates have lived in other states,
check the drivers’ records for those states. - Perform a background check.
- Obtain certificates of insurance with
established limits and be listed as an additional insured for employees operating
their own vehicles. - Compare drivers to established standards that qualify them to drive, such as
age, experience, MVR criteria, prior accidents, regulatory requirements, etc. - Consult with appropriate legal council
and HR when establishing driver policies.
The same guidelines that apply for qualifying a new hire should be in place for current employees. The main difference is updating information to keep a current profile. A key step of this process is ensuring
that MVRs are obtained and reviewed at
least annually.
What are some steps in building an effective
fleet safety program?
A clearly established and properly implemented fleet safety program offers the best
protection against negligent entrustment
claims.
- Make someone accountable for this
program and equip him or her with the
tools to manage it. - Determine who operates company
vehicles and any vehicle in relation to company business. - Develop a fleet risk management program that covers driver recruitment and
selection, new hire evaluation and training
and ongoing driver reviews. - Implement a written policy noting specific restrictions on personal use of company-owned vehicles.
- Periodically review safe vehicle operating criteria and behavior with drivers.
- Develop a driver orientation and training program appropriate for your class and
use of vehicles. - Follow a specific procedure to investigate accidents and monitor trends to
proactively manage vehicle-related losses. - Establish a formal vehicle safety inspection and maintenance program.
MITCHELL MADDOX is risk control manager at Westfield
Insurance. Reach him at [email protected] or
(800) 243-0210.