Employee Car CRASH (Coverage Rules And Self-Help) Tips

It doesn't matter whether a business oversees a fleet of vehicles or just one or two company cars. It doesn't matter if an employee driver was in a MIST accident – minor impact, soft tissue – or a major pileup. All it takes is one lawsuit for a company to learn the hard way that there are some common misconceptions involving employee-operated automobiles on the job. But a little self-help before the inevitable employee car crash can go a long way in limiting the exposure of the company and its insurer to expensive claims and suits.

Here a couple real-life situations where the result might surprise you.

The warehouse supervisor at a distribution facility participated in the company mileage reimbursement program. The procedures for the mileage reimbursement program were spelled out in a few pages distributed to all employees. The handout included the warnings that driving under the influence was a violation of company policy; and that participation in the program meant the employee could not use a company car at the same time. The supervisor kept track of the miles he drove his personal car on company business and submitted monthly reports to be reimbursed for his mileage.

One Saturday night he ran a red light after drinking for hours at a Texas Hold 'Em tournament for charity, and "T-boned" a compact car driven by a teenage girl, who was seriously injured. He was driving a company van at the time. He claimed to be heading back to the office to finish up paperwork in advance of an early job Sunday morning. He borrowed the company van after work from the loaner fleet because his own car was in the shop for repairs. It turns out he did not even have a valid license due to a suspension for a previous OVI conviction.

He was fired and imprisoned, then sued by the young driver's family. His lawyer brought into the lawsuit the supervisor's personal auto insurer as well as the employer and its business auto liability insurer. The personal insurer ended up splitting the cost of settling the case with the company, which had a high self-insured retention. The supervisor paid nothing because he was now indigent.

How could this happen?

In another case, a worker directing traffic for a road stripe painting contractor was handing over his radio equipment and stop sign to another worker so he could go on lunch break and the other worker could take over directing traffic. An older woman was distracted by her cell phone as she approached the work zone on the rain-slicked highway. Not realizing she should slow down, she struck and injured both workers as they stood in the roadway. The injured workers successfully made a claim for underinsured motorists insurance (UIM) coverage under the employer's policy, even though they were standing in the road...