After an accidental crash with a company vehicle, one of the most urgent issues will be determining who is at fault. In the event the employee is found responsible, while driving the company car: It will be the employee driving the company vehicle will be personally responsible for the accident or if it will be the company who owns the vehicle?
In most cases of car accidents at work, the employer’s liability coverage indemnifies the employee against third-party actions. This means the employer’s insurance company protects the employee from having to personally pay for damages to injured victims. In other words, it’s the employer’s responsibility to pay for injuries and property damage caused by an employee while driving a company vehicle.
What about if you are driving the company car and suffered personal injury? Workers’ Comp vs. Liability Insurance are two different types of insurance:
Workers’ compensation insurance covers:
- an employee injured on the job, including injuries sustained in a car accident while working,
- medical bills,
- out-of-pocket expenses,
- a portion of lost wages,
Liability insurance pays for damages sustained by third-parties. Your employer may have a general liability policy and a commercial vehicle insurance policy.
A general liability policy protects your employer by paying for damages to third-parties caused by all kinds of situations, like a customer slip and fall on company property.
A commercial vehicle policy is much like your standard auto policy; only the coverage limits are typically much higher. As with any vehicle insurance, the policy will have exceptions to coverage, meaning the insurance policy won’t pay under certain conditions. For example, the insurance may not pay if the driver of the company car was on personal business.
When the Employee is Responsible of a car crash with the company vehicle
There are situations when a company’s insurance will not cover an employee who causes a car accident such as:
- Criminal Activity: An exception to employee indemnification applies when the employee is committing a crime while driving a company vehicle. If the accident involves criminal activity, such as driving under the influence of alcohol or even drugs, the employer may rightfully refuse to indemnify the employee from third-party lawsuits.
- Going on a Frolic: An employee who decides to do their personal errands while on company time and causes an accident might not be protected from personal liability. Known as a “frolic” in some jurisdictions, it doesn’t matter if the employee is doing this on company time or not.”
- Non-Business Activity: Having a company car is a great perk, especially if you have use of the vehicle 24/7. Read the fine print in the vehicle agreement with your employer. You are probably not indemnified if you cause an accident while using the company car to commute to and from work, or while on personal or recreational travel outside of business hours.