One of the most awkward moments for any worker is getting into a vehicle accident while driving a company car. Since every employee wants to be viewed as highly responsible, this type of event requires sincere humility while explaining the circumstances of the accident.
If the employee was clearly at fault and using the company car for personal reasons at the time the collision occurred – liability issues can quickly multiply – especially if a third party was injured.
Before noting some of the key factors that must be evaluated when this type of event occurs, here’s a quick review of some insurance policy definitions.
Insurance policies that may be involved when an employee has a vehicle accident
- Commercial auto policy. The coverage or protection this type of policy offers to a company can be crucial following an accident. It’s designed to protect the business from having to cover all the personal injury expenses and property damage. Brokers often speak of this as a business auto or commercial auto policy;
- A general liability policy. Most employers carry one of these because it offers protection against all kinds of third-party legal claims, including those that might be filed after a third party falls down and is injured on company property – or hurt during an auto accident caused by an employee driving a company car;
- Worker’s compensation insurance. All employers of a certain size should carry this type of insurance that normally provides benefits to workers injured on the job – including those who were handling official business in a company car when a vehicle accident occurred;
- A policy rider. An amendment to an insurance policy. Some employees who choose to use their personal cars for business add a special rider to their personal auto insurance policies to provide coverage if they get into an accident while handling company business. Depending on the employee’s relationship with the company, some employers will reimburse the employee for the added expense this type of rider adds to the employee’s basic auto insurance policy.
Once liability for the accident is determined, one or more of the policies referenced above will have to be used to cover all the injury expenses and property damage repairs.
The legal doctrine of respondeat superior and employer liability
When an employee is driving a company car at the time of an accident (while actively handling assigned business tasks) – that s/he did not personally cause – the employer will normally be responsible for paying for all the damages. However, since various jurisdictions apply aspects of the respondeat superior doctrine differently, it’s important to check with your Houston business lawyer to find out exactly how this doctrine is applied in Texas.
Stated in general terms, respondeat superior usually indicates that the principal (employer) is normally responsible for most activities handled by the employee (agent).
One or more of the employer’s insurance policies (in addition to worker’s compensation), will normally cover medical expenses and the costs incurred due to property damage. However, insurance companies often quarrel over whether the employee was clearly handling business tasks at the time of the accident — and if s/he had current authorization to use the company vehicle.
Liability can shift when an employee was totally or partially responsible for the accident
The circumstances surrounding each accident will normally determine the exact percentage of damages that an employee must pay under his/her own policy. Whether any type of indemnity is offered to the employee usually depends on whether the third party involved caused the accident.
In most cases, an employee who caused a collision will be held fully responsible for all damages under his/her own personal auto accident policy.
However, when a third party caused the accident, there are still specific circumstances that will allow an employer to deny all liability. Several of these exceptions are set forth below.
- The “frolic or detour” exception. If the employee was running a personal errand at the time the accident in the company car occurred, she must normally cover all the damages under her own personal auto accident policy;
- The employee was under the influence of alcohol or drugs at the time of the accident. Once this has been conclusively established, the employer may be able to deny all liability;
- The accident did not take place during normal business hours. However, there can be exceptions – like when a salesperson is traveling to his/her next sales destination on behalf of the company;
- The employee was an independent contractor using his/her own vehicle. Potential liability for all types of vehicle accidents should be clearly spelled out in each employee’s company paperwork – before that individual can handle company business in any vehicle.
It’s always wise for an employee who was just in a company vehicle accident to request a timely meeting with company officials as soon as that person’s health allows. Everyone may benefit if a
compromise regarding liability can be reached – unless the employee’s behavior was clearly unacceptable.
If you have any questions about how your business or insurance provider should handle a specific type of accident involving a company car, please feel free to call one of our Murray Lobb attorneys. We can provide you with our legal opinion and possibly suggest legal paperwork you might want to have every employee sign before ever issuing any of them a company car for their use.