Work-Related Car Accidents: What’s Your Responsibility As An Employer?

If your employee is in a car accident on company time or in a company vehicle, are you responsible as an employer? What insurance is available to protect you in a work-related car accident?

It can depend on the particular circumstances, but there is a good chance you are responsible for accidents by employees in company cars or on company time. There is a doctrine in the law called “respondeat superior,” which means “let the master answer.”

In other words, a business owner is held liable in such cases in many cases. The same would be true in that a restaurant is held liable if a waiter spills a bowl of soup on a customer and a plumbing contractor is liable if a worker doesn’t install pipes correctly.

Various state courts have held to this statue, but they have also ruled that a company is not automatically responsible for all conduct of an employee during work time.

When An Employer Is Or Is Not Responsible

Even though an employer is often responsible for accidents on work time or in a company vehicle, he or she is usually not responsible for an accident by an employee on the way to work under a rule called the “coming and going” rule.

In Taylor Vs. Toyota, however, the California Court of Appeals ruled a car dealership should pay for injuries caused by an accident when an employee running a personal errand, using a car from the dealership, rear-ended another vehicle because the dealership had given the employee an implied or express permission to use it. Even though the dealership had procedures to keep track of cars used for personal errands, the court ruled the business had not taken adequate steps to ensure employees were not using cars for personal errands.

Employers may even be held liable for an employee’s accident on the way to a company picnic even though attendance is only “incidental” to work duties.

What Kind Of Coverage Is Available

What kind of insurance is available to protect your business in case an employee of yours is in a work-related car accident? You can cover either all autos your business owns; all cars your business owns, plus vehicles it leases or hires; or all cars used for your business, including those your company does not hire, lease, or own.

There are a number of types of coverage you can buy:

• Physical Damage Coverage will protect you in cases of collision, comprehensive, and specified perils. Collision coverage will protect you from losses caused by the collision of a covered vehicle with any object or if the auto overturns. Comprehensive provides protection for any cause other than collision or overturn. Specified covers many of the same things as comprehensive, but only the things named in the policy.
• Liability Coverage will pay for, up to the policy limits, all damages the business is legally responsible for because of bodily injury or property damage. Most insurance companies recommend coverage of $1,000,000, with a minimum of $500,000.
• A Combined Single Limit creates higher single limits for property damage and bodily injury. Often, the limits for a small business are $500,000 and $1,000,000.
• Your Business Umbrella policy will protect your owned, non-owned, and hired vehicles, if the policy shows the auto liability policy as one of the underlying policies which it covers.
• Your Auto Liability Coverage will cover company vehicles used by employees in the evenings or on weekends for personal use, if shown on the Declarations page. Your employees’ own auto insurance will cover them only if they have borrowed a company car temporarily while their vehicle is unavailable specifically as a replacement vehicle. If your employees lease, rent, borrow, or hire a car, they are not covered under your policy.
• The Non-Owned Auto Liability Endorsement for your coverage will protect you if your employees drive their own cars on company business.
• The Drive Other Car Coverage Endorsement will protect you if your employees or executives have a company car as their only car and are in an accident using the vehicle for personal use.

How Does Workers’ Compensation Factor In?

Workers’ compensation will pay for an employee’s medical bills, out-of-pocket medical bills, and a portion of lost wages, if he or she is hurt while driving a company vehicle within the scope of his or her employment. It does not pay for pain and suffering. If the accident results in disability, workers’ comp will pay a settlement award.

In many cases you, as a business owner, are responsible for work-related car accidents. In addition, the law says you are responsible if you knowingly allow an unsafe driver to use one of your cars. To avoid issues that could potentially harm your business, it’s important to make sure you have the proper insurance in the first place to deal with such unfortunate events.

Dan Levenson

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