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Negligent Entrustment: What You Need to Know

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As a business owner, it’s essential for you to recognize and understand the risks that can impact your business. This includes the actions of your drivers. If you have drivers on your team, you could be liable for any accidents or damage they create. Make sure you understand the amount and type of risk they represent.

Negligent entrustment means you’ve entrusted an employee with a poor driving history to drive on the company’s behalf. It applies regardless of if the employee is driving a commercial or passenger vehicle, or if the vehicle is owned by the company. The driver’s poor driving history could include moving violations or accidents he or she was responsible for causing. It’s your responsibility to take reasonable steps to learn about that driver’s background before he or she gets behind the wheel.

The focus of negligent entrustment suits is primarily on the employer and the policies and practices in place (or not in place) at that business. In commercial automobile operations, a case of “negligent entrustment” may arise when an employer allows an employee to use a vehicle, knowing or having reason to know that the use of the vehicle by such person creates a risk of harm to others.

In these types of situations, an employer can be charged for acting in an inattentive or careless fashion or without completing required process steps. It’s important to know that negligent entrustment suits and verdicts are increasing, settlements tend to be large, and judgments can often include punitive damages.

When does an incident potentially turn into a case or claim alleging negligent entrustment? The following elements are typically present:

  • The driver was incompetent
  • The employer knew or should have known of this incompetence
  • The employer must have entrusted the vehicle to the driver
  • The driver was negligent on the occasion in question
  • The driver’s negligence proximately caused the crash

Negligent entrustment, and other associated vehicle safety lawsuits are increasingly causing concern for employers. Taking the time and effort to develop and implement a safety and risk program is minimal when compared to the emotional and financial costs incurred from a negligent entrustment case.  Consult your insurance advisor to learn more.

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This blog post is a summary of article (of the same name) by Chris Halverson, Risk Management Sales Director. The full article is published in the July 2017 issue of Wisconsin Safety Voice on pages 8-9.

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