How Fleets Can Minimize Liability Exposure
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There are many key facets to operating a fleet. By ensuring the success of all the parts of a fleet, a fleet manager should expect to garner the best results in his or her operation. But the fact that fleet managers simply cannot predict what will happen to their drivers while they are on the road should always be in the back of their mind. In the event of an accident, not only should fleet managers be concerned about the driver’s safety, they should also be wary of the risks related to liability exposure.
Being held liable in a claim can affect a fleet in many negative ways. This includes potentially damaging the company’s public image, how the fleet itself is managed and operated, and, ultimately, what happens to the bottom line.
Some of the basic facets to maintaining a fleet, such as reducing costs and following proper fleet safety policies, can relay back to how a fleet effectively eliminates and addresses liability exposure.
The first place a fleet manager should look to when considering ways to limit liability exposure is internally with the fleet operation, or, more specifically, with its drivers and the safety policies that the company has created.
The future risks of being held liable in a claim ultimately rests on whether the fleet has taken care to carefully consider these aspects of its fleet before anything else.
Shannon Gatlin, senior associate at Alaniz Schraeder Linker Farris Mayes, said finding out how to eliminate the risks related to liability exposure starts before a driver has joined the company.
“You need to assess your driver qualifications very thoroughly before you ever hire someone and put him or her behind the wheel,” Gatlin said. “We advocate that in every driver file, you should have a comprehensive job description for that driver’s position. You want to have the application form. You want to have any follow-up information, notes, questions, etc., based off that application.”
The other key element that should be addressed early on, along with proper hiring procedures, is a comprehensive driver safety policy. This policy should not only have a direct impact on the drivers by the way it is set up to train and educate them, but it should also have a means of keeping an eye on driver behavior.
In regards to the education process, Jim Van Buren, safety/IT director for Corporate Claims Management (CCM), said that creating and communicating a fleet’s comprehensive safety policy is a key aspect to the training process. He credits online and behind-the-wheel training as crucial elements, and, in the case of a driver failing to live up to the standards that are held by the policy, he said reparations could be implemented. This includes possibly changing the driver’s job function, or even termination, as identified in the safety policy.
“Once you’ve hired someone, make sure that you have a good training course so that you can show that you’re training these people, that you do annual traffic safety record checks, and make sure they have no accidents they haven’t failed to tell you about,” said Judge Brian MacKenzie, CFO at the Justice Speakers Institute. “Have a good policy in place where, if someone fails to tell you about a traffic violation, there are employment consequences for that person. By doing all of that it makes it much more difficult to sue both the drivers, who have been trained, and the company, more importantly from the company’s standpoint.”
Laying out the groundwork for the policy and having employees abide by certain rules will act as more than just a safety measure for fleet drivers. It also can help to cover its bases in the event of an accident that could potentially hold a company liable.
“A good enforced policy limits the sort of people you hire, and makes sure the people you do hire are constantly being trained and updated. This makes it very difficult to say the company itself was negligent,” continued MacKenzie. “Accidents are going to happen regardless but a company that hires a driver who gets drunk and hits someone on company time is practically asking to be sued. Having a system in place that prevents such things, or sharply limits the ability for them to occur means that you’re less likely to be sued. And it isn’t just the cost of a lawsuit in terms of the result; it’s the cost of litigation.”
Litigation, regardless of outcome, can be a monumental cost to the fleet, MacKenzie said.
Van Buren echoed MacKenzie’s sentiments regarding the effectiveness of strong safety policy.
“Even with a solid driver safety program, there is always the potential for a liability suit, either from a third party or an employee,” said Van Buren. “This information will be valuable to the company’s legal department to indicate that they were properly monitoring and taking corrective action to mitigate any potential accidents that may have caused the incident to occur, even after the employee involved is no longer employed.”
While maintaining a comprehensive safety policy and the screening process are important parts to reducing liability, these processes are more static and don’t require continuous revaluation.
One ongoing practice that a fleet should be aware of is the continuous monitoring of driver behavior after an employee has joined the fleet.
This concept covers a number of topics that have to do with observing fleet drivers, including reviewing accident reports and telematics data, according to Van Buren of CCM.
But it’s the continuing observation of motor vehicle records (MVRs) that are a fundamental part of identifying driver behavior when it comes to looking for potential issues that may cause liability exposure. And while some fleets may tend to stick to reviewing the reports on an annual basis, it might do the fleet good to pull the MVRs more than once a year.
“It is also an incorrect assumption if a company believes that running MVRs annually is sufficient to reduce liability exposure. It is important to identify potential issues based on this information and act on it, not just go through the motions of ordering MVRs,” Van Buren said.
Conducting the checks more than once a year can help the fleet spot potentially risky behavior from a driver and ultimately find ways to address a potential risk for liability exposure. But it’s also whose MVR records the fleet monitors that plays an important role, as being selective over whose MVR is put up for review may do more harm than good.
“You need an MVR for all of your employees who perform work away from the office with any type of regularity, including sales people, regional managers, even if they use their personal vehicles. If they’re on the road, and it could be tied back to the business of working for the fleet, they are going to have a target on their chest, if they get involved in any kind of accident, just because of the deep pocket theory,” said Gatlin of Alaniz Schraeder Linker Farris Mayes.
The deep pocket theory refers to an assumption of extensive financial wealth or resources for a company.
“Whenever a fleet business or any other kind of business is involved in any kind of accident or incident with an individual, that individual has a financial incentive to sue that business or that fleet owner just about every time, because even frivolous cases will, ultimately, often end up settling because businesses are viewed as having deep pockets,” Gatlin continued. “Be that right or wrong, that’s how they are viewed by potential plaintiffs and plaintiffs’ attorneys, in particular.”
Conversely from the huge expenses that would occur in the case of litigation, MVR checks are not a costly procedure and may even end up curbing future incidents that could lead to said litigation.
“We suggest (checking) those MVRs because motor vehicle reports are really not a large expense by any stretch. At the very minimum, you need to run those annually. Honestly, I think that I personally would advocate that you do that more often than annually,” said Gatlin.
Being held liable as the result of negligence does not necessarily have to be restricted between a driver and his or her employer. It can also be looked at in terms of the employer and the vehicles in the fleet.
As with any vehicle, fleets should take special care to consider the condition of the vehicle before they are used by drivers. So, regular maintenance is crucial. But the technology available on vehicles also plays a role in regards to whether a fleet is perceived to be negligent in the event of an accident. If the fleet has chosen to opt out of implementing certain technological features to their vehicles, a jury may perceive the omission as negligence. Therefore, it must be prepared to clarify its reasoning for doing so in case of litigation.
“You want to make sure that you document any decisions that are made regarding vehicle safety technologies. If you’re not using the most up-to-date technology, you want to have the documented decision-making process that shows why,” Gatlin of Alaniz Schraeder Linker Farris Mayes said. “Juries nowadays expect every company and every police department to have the most cutting-edge technology at their hands,”
Gatlin noted the announcement that electronic logging devices (ELDs) will be mandatory in trucking fleets by December 2017. The Federal Motor Carrier Safety Administration (FMCSA) published the final ELD mandate in December 2015.
“Just to use a fleet example, if you’re not using the ELDs, they’re going to be mandated in a few years. A jury’s going to want to know why. And so you’ll want to have a good explanation and have documentation,” he said.
MacKenzie of the Justice Speakers Institute said that a jury could make considerations about an accident involving a fleet driver that drove a vehicle that lacked up-to-date safety features, but that it would have to be balanced with a standard of evidence.
“What are the best practices in fleet maintenance and equipment? And there are standards and best practices out there that fleet managers should be aware of and use,” MacKenzie said. “Obviously you want to use the best equipment you can and you want to have the highest standards you can, but a reasoned argument could be made that it’s unreasonable for a company to be required to do something a that something an average person wouldn’t be required to do.”
For those fleets that don’t self insure, insurance is another important aspect to factor in when a fleet considers how it chooses to address liability exposure. And while auto insurance will not eliminate the risks of liability exposure, it is an element that fleets should consider when noting the possibility of becoming liable in the event of an accident, especially since the insurance company is going to be largely involved in whatever happens in any crash.
“The insurance companies are going to want you to take as many steps proactively to reduce your liability exposure,” Gatlin of Alaniz Schraeder Linker Farris Mayes said. “And because, ultimately, if you’ve got insurance, the insurance company is the one that’s going to be paying out the claim and largely dictating any litigation that takes place. So, the more steps you can take to reduce your liability exposure, the more likely you are to get favorable rates or at least more favorable rates on your insurance.”
MacKenzie echoed Gatlin’s thoughts.
“If you’re paying insurance, and you have a lot of accidents where you have a lot of lawsuits, the insurance rates are going to go up. A good policy approach to hiring and how you train people will limit that,” MacKenzie said.
In the event that all the essential precautions have been implemented — such as proper screening, a good set policy, consistent monitoring — and an accident still occurs, a fleet driver still can put his or her best foot forward as a means to prevent issues related to ligation.
Some of the more basic steps include surveying the scene of the accident and contacting legal counsel.
Gatlin also highlighted the importance of the type of verbiage the driver uses when making a claim after an accident, since even seemingly innocuous words that he or she uses can be used against the driver and the fleet.
“A trucking company can categorize an accident as ‘preventable’ without assuming fault and without assuming liability, but the thing to remember is ‘preventable’ in a juror’s mind equates to liability, even though ‘preventable’ in the trucking industry does not necessarily mean the trucking company did anything wrong. So you want to be very careful after an accident,” Gatlin said. “If it goes before a jury and they see paperwork that says the company categorized the accident as ‘preventable,’ they may interpret that as, ‘Oh, so the company’s saying they should have prevented this,’ not they could possibly have prevented it.”