When To Say No And Protect Your Company

By Frank Thompson on Nov 11 in Transportation.

I recently attended a loss control seminar in which the speaker used the words “NEGLIGENT ENTRUSTMENT,” and warned all those present to avoid situations where they al­low someone to drive a company-owned vehicle that they knew had either physical impairment, age restrictions or legal constraints. When I got back to the office I did some research as to what negligent entrustment was and saw that it cor­responded exactly with the insurance restrictions that we run into on many accounts.
The definition of negligent entrustment is “a cause of action in tort law that arises where one party (the entrustor) is held liable for negligence because they negligently provided another party (the entrustee) with a dangerous instrumentality, and the entrusted party caused injury to a third party with that instrumentality. The cause of action most frequently arises where one person allows another to drive their automobile:”
Several years ago, one of our customers called to ask us what would happen to the driving privileges of a bobtail driver who was to get a DUI. My response was that he would immediately be excluded from driving. The owner then went back and relayed that decision to the young driver who was thinking ahead six months until a big weekend wedding of his brother. Several more times in the ensuing months, the owner and I discussed the situa­tion, and the owner repeatedly warned the driv­er of the consequences of getting a DUI. The Monday morning following the wedding, he came in to report that he had been arrested for DUI and was shocked when the owner prompt­ly fired him. Letting the young man continue to drive with a DUI would have been a prime example of negligent entrustment if the young man had an accident and the plaintiff’s lawyer found out about the DUI. I can hear the cash cash register ringing now.
Repeatedly, during the course of a year, we get calls from owners of propane companies with situations similar to the above example. A valued employee gets a DUI and wants to keep his job. Or a job applicant with a CDL license applies for a job and they only have ONE DUI, and the insurance company says no.
The harder issue is when the founder of the company is up in age and they still drive a com­pany owned vehicle. The insurance companies typically request an annual doctor’s statement regarding the driver’s mental and physical con­dition. Can they still see? Can they hear? Do they still have their extremities? Any serious diseases that would hinder them from driving? What makes this so tough is that in many cases, second or third generation family members are involved in the business and because of love and respect they do not want or dare to make the decision when the driving privileges cease or even make the case for having a doctor ex­amine them and fill out the health form.
My family was faced with this difficult decision when my father, who was 84 at the time, was involved in an accident in which he did not see the other car. He made the deci­sion easy when he himself made the decision that he would not drive any more. It broke my heart when I pictured him in his younger years, the bull of the woods, now relegated to having someone drive him around.
Or what about the decision of when a son or daughter of the owner gets a drivers’ license at 16? Do you put them in a company owned vehicle? One of the earliest cases of negligent entrustment was in Mississippi in 1915. The case of Winn V. Haliday “concerned the negli­gence of the father in entrusting a dangerous agency (car) to a son known to be negligent, based on the allegations that the father knew his son was given to “joy riding.”
Many of our older propane marketers learned to drive a bobtail back in “the good old days.” Fathers in the propane business needed another hand, and the kids learned the busi­ness from the bottom up. Many today learned to drive by driving dad’s bobtails. The good old days unfortunately are gone and insurance companies are requiring drivers of bobtails to be 23 to 65 primarily because they do not want to have to defend you and your company if the issue of negligent entrustment is raised after an accident because of the youth of the driver.
The insurance company does not like to say no to their valued customers, and no agent likes to say no to their clients, but when it comes to driv­ing privileges all parties must learn when to say no. The increased premium to a business due to a claim from an accident caused by a driver, who should not have been driving, will far surpass the benefit received by allowing such a person to drive. When in doubt of a situation, call your insur­ance agent and get the insurance companies input. See Additional Legal Input Here

Frank Thompson, CPCU
PT Risk Management

Frank Thompson

Frank B. Thompson is a chartered property and casualty underwriter based in Phoenix. He is the owner of PT Risk Management, an independent insurance company specializing in writing propane and petroleum risk policies throughout the U.S.

Add Comment