Wondering who pays when an employee crashes a car while working? Here’s what you need to know about liability for car accidents at work, vehicle insurance, and workers’ compensation.
The average American driver can expect to be in three or four accidents in their lifetime, and that’s just as likely to happen while driving a company vehicle as your family car.¹
If you’re driving a company car or truck and cause an accident, you probably expect the accident to be covered by your company’s insurance. But what if it’s your own vehicle?
Unfortunately, you may be personally on the hook for any injuries or property damage from a car accident during work, and on your own if the accident victim files a lawsuit.
American employers pay out an estimated $25 billion annually for motor vehicle crashes at work. Average payouts to accident victims can range from $65,000 for non-fatal injuries upwards to $671,000 for accident-related fatalities.²
Are you a non-employee injured in an accident with a commercial vehicle? Visit our Auto Accident Claims section for help getting the compensation you deserve.
Where does the money come from to pay those huge settlements? In most cases, high-dollar injury settlements are paid through the employer’s commercial vehicle insurance policy.
Insurance companies don’t make money by paying large settlements. Your company’s insurer would like nothing better than to deny coverage for your accident if they can get away with it.
If you’ve been hurt driving during work hours, you’ll have the workers’ compensation insurance company to deal with, too.
Here’s what you need to know about liability, negligence, and insurance companies when you’re the at-fault driver in a car accident during work.
Important Terms in Accident Claims
Before starting our discussion of car accidents at work, it helps to understand some common terms used by attorneys and insurance companies.
Negligence happens when a vehicle operator fails to act responsibly or does something no reasonable driver would do. For example, driving the wrong way on a one-way street.
Liability simply means responsibility. The at-fault driver or vehicle owner is usually liable for the accident victim’s damages.
Damages for car accident victims can include property damage, medical bills, therapy and rehab costs, related out-of-pocket expenses, replacement services, consortium claims, lost wages, and pain and suffering.
Third-party is the term used for individuals or business other than you and your employer. If you cause an accident while driving the company car, the occupants of the other car who ask for money are third-party claimants.
When the Company is Responsible
After a serious traffic accident at work, one of the most urgent issues will be determining if the employee driving the vehicle will be personally responsible for the accident.
The relationship between employers and employees who drive company vehicles falls under the legal doctrine of respondeat superior. This fancy Latin term means employers are legally responsible for the actions of their employees while acting within the scope of their employment.
The employer’s responsibility includes paying for injuries and property damage caused by an employee while driving a company vehicle.
In most cases of car accidents on work time, the employer’s liability coverage indemnifies the employee against third-party actions. This means the employer’s insurance company protects the employee from having to personally pay for damages to injured victims.
Indemnifying an employee also means the employer’s liability insurance pays the employee’s legal fees if he or she is named in a lawsuit after the accident.
Example: Car accident while making sales calls
Jon used his company car to make sales calls across the state. One evening while running late for an appointment with a customer, he collided with another car. The driver of the car suffered a whiplash injury and property damage.
Jon’s employer’s commercial insurance paid for the injured driver’s injuries and property damages. Hoping to “double dip,” the injured driver sued Jon personally. The employer’s insurance company stepped in and provided an attorney at no cost to Jon.
Federal employees or personnel authorized to drive government vehicles may be protected by the Federal Tort Claims Act so long as they were acting within the scope of their duties.
When the Employee is Responsible
There are situations when a company’s insurance will not cover an employee who causes a car accident.
Criminal Activity: An exception to employee indemnification applies when the employee is committing a crime while driving a company vehicle. If the accident involves criminal activity, the employer may rightfully refuse to indemnify the employee from third-party lawsuits. This can include driving under the influence of drugs or alcohol.
Going on a Frolic: If you’re goofing off with the company vehicle, some jurisdictions call that a “frolic.” If you’re in an accident while running personal errands, even if it’s during your work time, you may be personally liable for any injuries or property damage to others, even injuries to co-workers who might be goofing off with you.
Independent Contractor: Using your personal car on behalf of the company, like for pizza deliveries, may not protect you from personal liability if you’re in an accident while on the job. If you lease a company-owned vehicle like a taxi cab or tractor-trailer, your contract could have language that makes you liable for any accidents involving the vehicle.
Non-Business Activity: Having a company car is a great perk, especially if you have use of the vehicle 24/7. Read the fine print in the vehicle agreement with your employer. You are probably not indemnified if you cause an accident while using the company car to commute to and from work, or while on personal or recreational travel outside of business hours.
If you’ve been in an accident while driving a company car, protect yourself legally and financially by contacting a personal injury attorney. They will help you understand your risks and options.
Workers’ Comp vs. Liability Insurance
Liability and workers’ compensation are two different types of insurance:
Workers’ compensation insurance covers an employee injured on the job. This includes injuries sustained in a car accident while working. Worker’s comp typically covers the injured employee’s medical bills, out-of-pocket expenses, and a portion of lost wages.
Liability insurance pays for damages sustained by third-parties. Your employer may have a general liability policy and a commercial vehicle insurance policy.
A general liability policy protects your employer by paying for damages to third-parties caused by all kinds of situations, like a customer slip and fall on company property.
A commercial vehicle policy is much like your standard auto policy; only the coverage limits are typically much higher. As with any vehicle insurance, the policy will have exceptions to coverage, meaning the insurance policy won’t pay under certain conditions. For example, the insurance may not pay if the driver of the company car was on personal business.
The exceptions listed in a general liability or commercial vehicle policy can use confusing legal-type language and may be subject to interpretations. These are the clauses the insurance company will use against you.
When you’ve hired a personal injury attorney, one of the first things your attorney will do is get copies of your company’s insurance policies.
Business “Rider” for Personal Auto Insurance
Some jobs require an employee to use their personal vehicle, such as outside sales, pizza delivery, and home health care.
If you cause an accident while driving your own car on the job, you may be caught between two insurance companies. You can avoid this problem if you purchase special insurance coverage on top of your existing policy. The additional insurance is called a “rider.”
A rider is an addendum to personal car insurance that provides coverage in case of an accident while using the car for company business. Purchasing a rider usually increases premiums, and some employers are willing to reimburse you for the additional cost.
Without a rider, your auto insurance company can deny coverage and leave you personally liable for any damage you caused while on the job.
A rider may not be necessary if your employer provides coverage under their commercial liability policy. The employer should provide you proof of insurance or a copy of the commercial policy.
If the employer refuses to give you a copy of the policy or says it’s not available, assume you’re not covered if you cause an accident. Having a car accident during work without proper coverage can be disastrous, so think twice before accepting that job.
An employer’s commercial policy may cover an employee’s vehicle while the employee is actively working, but not while commuting to and from work.
Accidents that occur outside of the workplace, while commuting to and from home, or when driving between job sites, may not be considered acting within the scope of employment.
Example: Rider to a personal insurance policy
Aidan used his car to make pizza deliveries for a national pizza franchise.
In compliance with corporate rules, Aidan provided his employer with proof he purchased a rider to his car insurance policy. The rider insured Aidan for up to one million dollars against third-party injury claims.
The company reimbursed Aidan for the additional cost of the rider.
When You Need an Attorney
Accidents happen to the best of drivers. If you’ve been in a car accident during work, it’s normal to be upset and anxious, especially if other people were badly injured.
You may be technically at fault for the crash, but you still deserve protection. If you have any worries that your employer’s insurance company is going to throw you under the bus, contact a personal injury attorney.
If you were injured in an accident while driving the company car, and your workers’ compensation claim has been denied, contact a workers’ compensation attorney.
Accidents involving company vehicles are complicated. You owe it to yourself to find out where you stand. It costs nothing to find out what a good attorney can do for you.
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