Mitigating Sources of‘ 'Hidden’ Liabilities
Detailed fleet policy that clearly defines authorized drivers can help deflect unauthorized use and avoid or mitigate liability in risk-prone situations.
Anticipating "what-if" scenarios can be a futile, exasperating exercise in the pursuit to protect a company from employee driver-caused liability. "Hidden" liability - unique risk management situations - are too numerous to contemplate or envision.
For example, how many fleet managers would consider the following scenario when developing personal use policies?
A licensed teenage child is allowed personal use of an employee's company vehicle. The teenager is at a party drinking and, realizing he is unable to drive, gives the keys to a friend to drive home. The friend gets in an accident on that drive.
Is the company liable for damages or injuries, based on issues of negligent entrustment?
Most likely, the company indeed would be held liable to some degree in this case, according to Jeff Fender, director of sales and marketing for Fleet Response, a fleet management company headquartered in Cleveland.
"Insurance follows the vehicle," Fender noted. "Once you provide that company vehicle, you are responsible for the driver."
That the friend is an unauthorized driver, a violation of company policy, may mitigate some liability, but not completely, said Fender.
While he has not encountered this scenario, Fender has experienced cases in which accidents occurred while an employee allowed a girlfriend or boyfriend to drive a company vehicle.
Driver Policy Can Help Avoid Liability Issues
In truth, said Fender, there is "no magic bullet" to protect a company against all potential risk involving employees who drive on company business.
"When a company allows another driver, they bring exposure to the forefront," noted Fender. "Most company policies prohibit anyone under 21 from driving the company vehicle. That's the route I would take. If management wants to allow children, they should be over 21 and subject to all the risk checks as the employee," MVR reports, etc.
"Everything starts with the driver policy," agrees Ed Iannuzzi, manager client support services for the fleet management company Automotive Resources International (ARI), based in Mt. Laurel, N.J.
Driver policy details vehicle use, "what the employee can and cannot do with the vehicle," and the consequences of noncompliance, said Iannuzzi.
To avoid scenarios such as the hypothetical case of the teenager turning over the company car keys to a friend, Iannuzzi advocates implementing a policy decision.
"The company should clearly define which family members can drive a company vehicle. "If a company decides to prohibit a licensed child from even driving a company vehicle," he explained. "The driver policy should state that no child is allowed to drive a company vehicle."
A fleet manager's efforts in monitoring company vehicle use can be limited, pointed out 28-year fleet industry veteran Randy Shadley, CAFM, director of safety programs and account manager at Corporate Claims Management, Inc. (CCM), an Ivyland, Pa.-based fleet management company.
"Fleet managers are rarely the ones handing out keys to company cars, and sometimes they don't even know who is driving a fleet vehicle until an accident is reported," Shadley explained. "For example, a supervisor might ask a clerk to run to the office supply store for a printer ink cartridge and simply gives the clerk - an unauthorized driver - keys to her company car."
Detailed fleet policy that clearly defines authorized drivers, spells out noncompliance consequences, and is communicated to all company drivers can help deflect unauthorized use and avoid or mitigate liability in risk-prone situations.
"At the heart of the matter, if someone gets injured in an accident and the case goes to court with a jury who feels sorry for the victim, the consequences can be tremendous, even when the company is backed with policies and rules and the driver has blatantly violated those stated policies," said Shadley.