Protect Your Business from Risky Drivers

CNA Explains How to Avoid Negligent Entrustment

“Negligent entrustment” can stem from employees driving company-owned vehicles, their personal vehicles, or other vehicles on company business. Employers have a responsibility to know if an employee has something in his or her driving background that creates a risk to others. Negligent entrustment implies a company knew or should have known that it put an unsafe driver behind the wheel of a vehicle and allowed that employee to drive on behalf of the company. (CNA is an MCAA benefactor sponsor.)

A party injured by the company driver must generally prove five elements to establish liability in a lawsuit for negligent entrustment:

1. The owner company entrusted the vehicle to the driver or knew the person was driving on behalf of the company.
2. The driver was unlicensed, incompetent, or reckless.
3. The owner company knew or should have known that the driver was unlicensed, incompetent, or reckless.
4. The driver was negligent in the operation of the vehicle.
5. The driver’s negligence resulted in damages.

A driver may be judged incompetent if he or she is intoxicated, unlicensed, inexperienced, or has a record of reckless driving. Examples include the following:

• The driver does not possess a drivers’ license or is driving with a suspended license.
• The driver does not possess a commercial driver’s license when it is required for the type of vehicle being operated.
• The driver does not have experience or lacks training in operating a specific type of vehicle.
• The driver’s motor vehicle record (MVR) has several at-fault accidents or moving violations in the past few years.

Some jurisdictions use the Federal Motor Carrier Safety Regulations (FMCSR) to establish minimum competency for drivers. FMCSR is increasingly being referenced as a benchmark to measure the qualifications of an individual when driving is a regular part of his or her job duties. The FMCSR standards are also utilized by companies that are not under the authority of the Department of Transportation. In simple terms, FMCSR requires that a driver:

• hold a valid driver’s license;
• be physically qualified to operate the vehicle;
• be able to read and speak English;
• by reason of experience or training, be able to safely operate a vehicle; and
• by reason of experience or training, be able to determine whether the cargo is securely loaded.

Negligent Entrustment Example 1

On his way to work, an employee was driving a vehicle owned by Business A when he passed out from a medical condition. His vehicle struck several other vehicles and killed one of the passengers. Business A knew this employee’s license had been revoked because of his medical condition, but still allowed him to drive a company vehicle to and from work.

Negligent Entrustment Example 2

Driving his own vehicle on company business, an employee of Business B pulled out into the path of a motorcycle. The rider of the motorcycle was killed. The employee had been driving on business for Business B about five years and did not have a driver’s license. Business B never requested a copy of the employee’s license and never reviewed the employee’s MVR.

What You Can Do To Reduce Your Exposure to Negligent Entrustment

While the driver’s negligence in causing an accident is usually the primary issue, the investigation of negligent entrustment charges must focus upon two main issues: the company’s policies and the company’s actual practices. Were policies in place, and were the policies followed?

Your fleet management program must be followed and documented. Management must be held accountable for implementing the fleet management program. The following list includes areas that your company’s program should include:

• Driver selection procedures that include review of employee MVRs
• New employee orientation and training
• Ongoing driver training
• Post-incident or post-accident review and training
• An enforced policy limiting driver distractions, such as cell phone usage and texting
• A drug and alcohol testing program
• Adherence to local, state, and federal laws
• A strictly enforced, with no exceptions, disciplinary procedure for violations, which includes revocation of driving privileges

To help avoid a negligent entrustment situation, your fleet management program needs to include:

• reviewing the MVRs for all drivers, at least on an annual basis;
• removing the employee from driving positions if he or she develops an unacceptable driving record; and
• ongoing training of drivers on safe driving behaviors.

School of Risk Control Excellence (SORCE®)

CNA offers educational courses to help policyholders improve their fleet risk management:

• Driver Selection
• Distracted Driving
• Drug and Alcohol Testing
• Regulatory Requirements of Commercial Fleet Ownership

Additional tools and resources from CNA are available to help reduce auto and fleet risks at www.cna.com/driverperformance.

For more information, visit www.cna.com/riskcontrol. MCAA thanks CNA for being an MCAA benefactor sponsor.

The information is intended to present a general overview for illustrative purposes only. It is not intended to constitute a binding contract. Please remember that only the relevant insurance policy can provide the actual terms, coverages, amounts, conditions and exclusions for an insured.