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  • February 28, 2021

Doctrine of Negligent Entrustment Significant Risk to a Contractor

Doctrine of Negligent Entrustment Significant Risk to a Contractor

Doctrine of Negligent Entrustment Significant Risk to a Contractor 1024 538 Dominion Risk

Automobile and workplace accidents are an expensive liability for contractors. You rely on the use of vehicles, mobile equipment, lifts, scaffolds and tools for your business.  These accidents pose a direct risk to your employees, other contractors, your clients and your reputation. In our current legal climate, that risk has increased in recent years from a multitude of factors including drug use, distracted driving and the legal concept called negligent entrustment.

Negligent entrustment occurs when an employer is held liable for negligence in choosing an employee to operate a dangerous instrument, usually a vehicle or piece of mobile equipment. An employer can be found negligent if both of the following situations occur:

  1. An employee is involved in a vehicle, equipment or jobsite accident that causes bodily injury or property damage.
  2. The employer knew, or should have known, not to trust the vehicle or equipment to an unsafe operator or to allow that employee to work in hazardous conditions.  

If the employee:

  1. is working within the scope of his or her job duties,
  2. has permission to use a vehicle for work (whether owned by the employee or the business), operate mobile equipment, or expose others to harm

 it is presumed that the employer has trusted the driver with the vehicle.

A negligent entrustment lawsuit can cost a company millions of dollars, but can be easily prevented by avoiding simple, but possibly fatal, mistakes.

Examples of situations where the employer should have known not to entrust its employee include:

  1. Known drug or alcohol abuse.
  2. Dangerous health issues.
  3. Inattention, sleepiness, or dangerous behavior.
  4. Bad driving records, including multiple speeding tickets, reckless driving, driving while impaired, or suspended license.

The following can be used to prove a finding of negligence:

  • An investigation of the accident scene
  • Interviews with employees, witnesses, family members or neighbors
  • Other applicable evidence that includes citations issued to the drivers
  • Public records

Companies must be able to show that they took all possible precautions to prevent accidents. If not, the actions they did or did not take might be construed as negligent entrustment.

Liability Coverage is Not Sufficient

Some liability policies do not offer coverage for incidents of negligent entrustment. Although business auto policies do not exclude negligent entrustment, coverage may not be sufficient if an employee is involved in a harmful accident.

In addition, there is the potential that a judge or jury could increase the penalties / judgements because the employer recklessly exposed others to harm.  Punitive damages are frequently imposed and many jurisdictions do not allow insurance policies to cover punitive awards.

How to Avoid Negligent Entrustment

Reduce exposure to negligent entrustment lawsuits by adhering to the following best practices:

  • Prescreen all individuals granted permission to drive for company business. Review their driving records annually.
  • Provide regularly scheduled driver reviews and comprehensive training sessions.
  • Drug-test before you employ, after accidents, with cause and on a random basis.
  • Listen to your employees when they express concern or complaints about unsafe behavior from their peers.
  • As part of a thoughtful safety culture, visit your jobsites and look not just for hazards, but unsafe behavior.
  • Maintain company vehicles and equipment to ensure that they meet strict safety standards.
  • Conduct post-incident and post-accident investigations by talking to the employee, witnesses and supervisor.
  • Have a thorough safety program that includes training, documentation and consistent enforcement.
  • When you hear jokes about alcohol or drug consumption, take it seriously and evaluate its impact on the safe operation of your equipment.
  • Define your personal auto permission policy. Anyone with permission to drive a vehicle for company business is classified as an insured on a company policy.
  • Enforce a zero-tolerance policy for driver or equipment operator misconduct.
  • Have a progressive discipline policy. Use it, document, and be consistent.
Your business deserves the best risk management and insurance advice. Dominion Risk Advisors will help you analyze your business risks and present practical, effective solutions. We will provide you with options to identify, mitigate, eliminate and transfer risk. We provide unmatched service, advocacy and advice.
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