What to Do If One of Your Employees Crashes a Company Vehicle

What to Do If One of Your Employees Crashes a Company Vehicle

Statistics show that there are over 6 million car accidents in the United States every year. If your business owns a company vehicle, there’s a very good chance that eventually one of your employees will be in an accident while driving it.

Hopefully, it will be a small fender-bender that you can resolve quickly and easily. There’s a chance, though, that it’ll be more serious.

As an employer, what do you do if your employee is involved in an accident in a company vehicle? Read on with highly detailed stats to learn more!

1. Understand Your Liability

The first thing you’ll want to do — after checking to see if everyone is okay — is to understand who’s liable for damages and injuries. The answer to this question is a bit complicated, as it depends on the circumstances under which the accident happened. Here are some of the most common scenarios.

Vicarious Liability

In many cases, employers are responsible for the negligent actions (or non-actions) of their employees as long as the employees are:

  • Acting within the scope of their employment duties and
  • Not committing any crimes

The technical term for this liability is “respondeat superior” or “vicarious liability.” In a case where an employee runs a red light and causes an accident, there’s a good chance you’ll be held liable.

There is one caveat, though. You, as the employer, must have authorized the employee to drive the vehicle or driving the vehicle must be so closely related to their scope of employment that authorization is implied.

Vicarious liability would apply in circumstances such as:

  • Running work-related errands
  • Traveling to and from a client’s home for a service call
  • Driving with a client to or from an appointment
  • Driving to a mandated training meeting
  • Running an errand for the employer or boss
  • Any other driving an employer directs an employee to do
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On the other hand, vicarious liability would not apply in the following situations, even if the employee is driving the company vehicle during work hours:

  • Employee driving to or from their home (unless the employee is paid for this commute)
  • Stopping at a drive-thru on the way to a company appointment
  • Going anywhere besides where the employer has instructed
  • Driving anywhere that’s outside the scope of employment

It’s clear that understanding the specifics that led up to the accident is critical for determining liability. In addition to the examples above, the employer would also likely escape liability if the employee is engaging in criminal activities at the time of the accident or if they’re pursuing other non-work-related activities.

Criminal Activities

If an accident with a company vehicle occurs while the driver is committing a crime, there’s a good chance that you won’t be liable. Further, there’s likely no chance that they can file a claim against your insurance company or for worker’s compensation.

The most common scenario where this could come up is if an employee is driving the vehicle under the influence of alcohol or drugs.

Non-Work-Related Activities

If your employee is in an accident in the company vehicle but is not performing work-related activities, it’s also likely that you can avoid liability. This could happen if the employee takes the vehicle out to run personal errands and would apply whether or not it happened during regular working hours.

In some jurisdictions, this is known as a “frolic,” and in almost all cases the employee holds personal responsibility when these circumstances apply.

2. Learn How Worker’s Compensation Applies

If your employee has been injured in the accident, there’s also a chance that worker’s compensation might come into play. This is especially important if the other party involved in the accident has less-than-sufficient insurance coverage. In this case, it’s often in the employee’s best interest to file a worker’s comp claim rather than to waste their time trying to pursue the other driver.

Generally, worker’s compensation will only cover medical bills and lost income and does not provide compensation for pain and suffering or other damages. To receive this compensation, the employee will have to sue the other driver.

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To sue another driver for losses, your employee must show that the other driver was at fault for the accident. If your employee was at fault, then worker’s compensation is often the only option. As long as your employee was driving as part of the scope of employment and wasn’t committing a crime, they should have no problem receiving worker’s compensation benefits.

3. Consult with an Attorney

Since there’s a good chance that you will have at least some liability, it’s always a good idea to consult with a qualified attorney right away. You can learn more about this area of practice here.

Accidents that happen with company vehicles are complicated, and it’s not something you should try to navigate on your own. This is a case when it’s definitely best to defer to a pro.

4. Check Your Insurance Policy

Some company insurance policies cover employee collisions while others don’t. You’ll want to check your policy and make sure you’re properly covered before it becomes an issue. If you’re not sure what kind of coverage you need, consult with an insurance professional who can help you tweak your coverage if necessary.

5. Educate Your Employees About Proper Use of the Company Vehicle

One of the best ways to minimize the potential for accidents with company vehicles is to educate your employees. Set out very clear rules that state when an employee is authorized to use company vehicles, and for what purpose.

Make sure your employees know that if they’re engaging in non-allowed activities while using the company vehicle, they’re personally responsible for anything that happens. Often, this is enough to make them think twice.

You can also minimize the chances of an incident by providing employees with information about defensive driving and safe driving practices. Finally, make sure that your vehicles are always kept in top-notch condition and that your employees know that they need to notify you of any potential safety issues like soft tires or worn-out windshield wipers.

Take Your Business to a Whole New Level

Now that you know all about how to handle issues with your company vehicle, it’s time to take even more action to improve your business.a

Check out more of our blog posts for additional tips that will help you take your business to a whole new level.

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