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Driving Down the Risks

Home healthcare providers should be aware of the risks that can arise whenever an employee uses a personal vehicle on behalf of the company. The following common situations, among others, may result in non-owned vehicle exposure:

  • Office staff run company errands in their own vehicles.
  • Sales/marketing representatives drive their own cars to meet potential clients.
  • Caregivers transport clients to appointments or outings in their own automobiles.

If an accident occurs on company business and the employee is at fault, the employee’s auto insurance policy becomes the first line of coverage. If damages exceed the policy’s liability limits, the injured party may attempt to sue the company, alleging that it negligently entrusted the employee to drive on its behalf.

Liability Considerations
If business owners fail to take adequate safety precautions or ensure that employees are qualified to perform their job duties, their defense in the event of a lawsuit is significantly weakened. Owners can be held vicariously (i.e., indirectly) liable for damages if the plaintiff ’s attorney can prove that the employer negligently entrusted an unfit driver to operate his or her own automobile on company business without first attempting to ascertain the driver’s competence. Drivers may be deemed incompetent if they were not qualified to operate a vehicle at the time of the accident, had a history of accidents or violations, or lacked proper skills. Therefore, the motor vehicle record (MVR) of employees who drive on behalf of the company must be checked regularly to screen for high-risk drivers and minimize organizational exposure.

The following scenario illustrates how entrusting the wrong driver can result in liability for a home care provider:

While transporting a client to a physician’s appointment in his own car, an employee of XYZ Home Care collided with a motorcycle, injuring the rider. Subsequently, it was learned that 18 months earlier, the employee had been arrested for driving under the influence of alcohol, and his license had been revoked. XYZ management had not reviewed his MVR during that time and was unaware of this fact.

Risk Control Strategies
The following measures can help minimize potential liability for business-related accidents involving employee-owned vehicles:

  • Review and comply with the terms and conditions of the policy issued by the CNA underwriting company, including the provisions concerning non-owned vehicle exposures.
  • Permit only authorized employees to use personal vehicles for business-related purposes.
  • Check the MVR of employees before they start driving on company business and annually thereafter, adhering to the eligible driver criteria and violation restrictions outlined in the program driving guidelines.
  • Require proof of insurance from employees who drive their personal vehicles for business purposes.
  • Ensure that employees’ auto liability limits are consistent with state coverage requirements, preferably with combined single limits of at least $300,000.

Vehicle Safety Program
Written safety policies and documented practices play an important role in reducing liability exposure. An effective vehicle safety program should include the following elements, among others:

  • strict adherence to driver selection criteria, with special attention paid to drivers under age 21 and over age 70
  • explanation of driving policies during new employee orientation, as well as ongoing reminders of safety rules
  • written ban on the use of cellular telephones and other distracting devices while driving on company business
  • formal drug- and alcohol-testing protocols for all company drivers
  • routine, documented inspection of business-use vehicles to confirm they are properly maintained and safe to operate
  • thorough and objective accident-reporting and investigation procedures, for documentation purposes and to reduce the likelihood of future incidents
  • consistent enforcement of disciplinary measures for violations, including revocation of company driving privileges for serious violations

Many home care providers offer incidental transportation to clients and rely upon the use of employee-owned vehicles to conduct business. Sound policies and ongoing safety training can help protect clients, staff and others from injury, while minimizing the risk to the organization’s tangible and intangible assets.

The information, examples and suggestions presented in this material have been developed from sources believed to be reliable, but they should not be construed as legal or other professional advice. CNA accepts no responsibility for the accuracy or completeness of this material and recommends the consultation with competent legal counsel and/or other professional advisors before applying this material in any particular factual situations. This material is for illustrative purposes and is not intended to constitute a contract. Please remember that only the relevant insurance policy can provide the actual terms, coverages, amounts, conditions and exclusions for an insured. All products and services may not be available in all states and may be subject to change without notice. Use of the term “partnership” and/or “partner” should not be construed to represent a legally binding partnership. CNA is a registered trademark of CNA Financial Corporation. Copyright ©2011 CNA. All rights reserved.