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Health & Safety


Health & Safety

Company Vehicle Exposures

by Ron Pettit, Loss Control Specialist, The Harry A. Koch Co.

Consider the potential liability that may result from allowing employees to operate vehicles for company business without knowing their driving record. What impact would a major vehicle accident have on the financial stability of your business?

Entrusting an employee with a valuable vehicle loaded with equipment and materials is an expensive venture. Once the employee leaves the parking lot you have no control over them. Therefore, it is very important that policies and procedures are in place to ensure driving records are reviewed and appropriate action is taken to weed out employees with unfavorable driving records.

The Doctrine of Negligent Entrustment demonstrates the necessity of exercising reasonable care in allowing the use of owned and non-owned vehicles. The Negligent Entrustment Doctrine, in its general form states:

  • The principle is not founded upon negligence of the driver but upon the negligence of the employer by supplying a vehicle to an incompetent driver.
  • The company can be held liable for an injury inflicted by that driver provided it was caused by the driver’s inexperience, incompetence, recklessness, etc.

Insurance companies are going back five years for Motor Vehicle Records (MVR) to see what type of character the person has when behind the wheel. Employees who drive personal vehicles on company business must provide evidence of vehicle insurance. An annual certificate or proof of vehicle insurance must be kept in the employee’s file. Business owners who wouldn't think of allowing employees to operate dangerous machinery without safety measures and policies in place often don't have firm polices in place governing the use of business vehicles.

To minimize the risk of potential liability, motor vehicle record reviews should be conducted prior to hire and annually thereafter for every employee whose job requires operating a company vehicle along with all employees that use their personal vehicle for company business should also be included in the process. It should be noted that the Driver’s Privacy Protection Act (DPPA) and the Fair Credit Reporting Act (FCRA) prohibit state department of motor vehicles from disclosing motor vehicle record information without signed consent from the employee.

Don’t let a vehicle accident, caused by an employee with an unfavorable driving record jeopardize the financial stability of your company. Conduct annual motor vehicle record reviews of employees operating owned, leased or rented company vehicles, and using personal vehicles for company business. Integrating these guidelines into your business operations will minimize liability exposure, increase employee awareness regarding safe driving habits, reduce accidents and reduce insurance costs.