Managing the Financial Side of Commercial Fleets

Minimizing Liability in Fleet Operations

July 2010, by Dona Szak and C. David Mee

Click here for a pdf of the print version that appeared in the July/August issue of Fleet Financials.

Given the time and expense of defending a lawsuit — regardless of whether the suit has merit — what are steps to take to avoid the possibility of a suit, or if sued, to mount an effective defense? Discussed are the major grounds for liability, key steps in the claims process, and preventive measures that can help minimize liability.

Two Legal Theories Relevant to Fleet Users

The two primary legal theories of concern to fleet users and employers are respondeat superior ("let the master answer") and negligent entrustment. 

Laws vary from state to state, but in general, respondeat superior allows an injured party to sue an employer for damages caused by the wrongful conduct of an employee acting in the course and scope of the employer's business, even if the employer personally is not at fault.  

The rationale is the employer directs an employee's activity and probably receives some benefit from the employee's action. For example, if the driver of a delivery van negligently ignores a stop sign while en route to a customer's business and hits another car, the driver's employer is responsible for the resulting damage.  

It is important to note the employer would be liable even if the driver were using his personal vehicle for business purposes, provided driving is part of the employee's job responsibilities.

Negligent entrustment is a legal doctrine that allows an injured party to recover damages from an employer who knows, or has reason to know, that a driver's use of the company's vehicle creates a risk of harm to others. Unlike respondeat superior, negligent entrustment does not require the accident occur while the driver is working.  

Negligent hire, negligent supervision, and negligent maintenance are additional grounds for employer liability. With any legal theory, the claimant typically requests compensation for damage to the vehicle, physical injuries, pain and suffering, lost earnings, and perhaps punitive damages.

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