Business Auto Insurance Policy – Don’t Be Sideswiped By Negligent Entrustment
Business Auto Insurance Policy – Don’t Be Sideswiped By Negligent Entrustment
What if an unscheduled event suddenly seizes control of your business? Are you ready?
With hazardous driving conditions about to return, it becomes even more important to examine the theory supporting negligent entrustment.
The law maintains a company has a legal duty to investigate the driving records and qualifications of all potential drivers and take action to prevent them from operating vehicles in an unsafe manner during the course of company business.
While a Business Auto Policy has no exclusions for negligent entrustment, even with coverage you may not have enough insurance if one of your insureds is involved in an accident.
Because anyone with your permission to drive a vehicle on company business is classified as being an insured, it is important to define your permission policy before an incident occurs. Otherwise your insurance company will do so after a claim has been filed. The rule of thumb is to ensure flexibility without creating a personal use permission policy that is too broad.
When it comes to negligent entrustment, it is important to remember punitive damages are not insurable in most states. Since punitive damages are meant to punish employers, to do otherwise would be against public policy.
Following are some guidelines to steer clear of negligent entrustment exposures:
- Establish clear and concise safety policies – including rules prohibiting distracted driving practices (texting and phone use) — and reinforce them often.
- Enforce clearly defined driver criteria.
- Pre-screen all drivers who have permission.
- Monitor and enforce drug and alcohol policies
- Review the driving records of all those with permission at least annually.
- Mandate training modules for all at-risk drivers.
- Ensure company vehicles are maintained regularly.
- Have a comprehensive Auto Fleet Manual, even if your fleet is small.
Please contact a KMRD Partners relationship manager to review your firm’s auto insurance for any coverage gaps.
KMRD reduces the overall cost of risk by producing a greater value for each commercial insurance dollar spent, while utilizing an enterprise risk management approach to engineer the optimal solution.
We are dedicated to the mitigation of risk, safety and loss control and claims advocacy, while helping firms recover from unplanned events that wait on the other side of one minute from normal. For a quick review of insurance terminology and coverages, visit our Insurance Reference Library.
To identify and correct coverage and service gaps in your insurance coverage contact us at contactus@kmrdpartners.com before one minute from normal strikes.
Need to deliver better risk management results for your company? Schedule a brief demo of our unique collaborative risk management system, KMRD XChange.
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