Gray-fleet drivers can pose to your employer the very same negligent entrustment issues as if they were driving company-provided vehicles. In a very real sense the company IS providing the vehicle, by virtue of paying (or reimbursing) for the use of that vehicle.
A “gray-fleet” refers to vehicles used for your company’s business that are not provided directly by the company. Think vehicles used under an auto allowance or mileage reimbursement program, or short-term vehicle rentals, and possibly even vehicles used by non-employees, such as Contractors*.
In last month’s column I talked about negligent entrustment, and the importance of putting only qualified drivers behind the wheel of fleet vehicles.
This month’s column expands the issue of negligent entrustment to make you aware that your gray-fleet drivers can pose to your employer the very same negligence issues as if they were driving company-provided vehicles. In a very real sense the company IS providing the vehicle, by virtue of paying (or reimbursing) for the use of that vehicle.
More to the point, however, is that ANY vehicle used when conducting the company’s business means that the driver is acting “within the course and scope of his or her employment,” and therefore the legal doctrines of “respondeat superior” (Latin for “let the master answer”) and the resulting negligent entrustment are in play.
True, drivers who provide their own vehicle (should) have liability insurance covering the vehicle, but when the amount of damages or a settlement exceed the limits of the driver’s personal insurance (as is often the case in severe crashes), the company will likely be held responsible for the excess.
Further complicating the issue is whether the driver’s personal insurance even covers regular business use – that’s not always the case, especially if the vehicle is driven predominantly (over 50%) for business. A company would be wise to verify that gray-fleet drivers have adequate insurance coverage, ideally even naming the employer as an “additional insured.” That way, if the coverage is changed, not renewed, or is canceled, the employer will be notified by the insurer.
So how can a fleet manager help his or her employer manage gray-fleet drivers? I recommend that fleet managers check their employer’s existing policies on this subject. You might find an opportunity to help protect your company and increase your value by improving (or even creating) those policies. Here are some ideas you might want to explore:
• Make sure the driver policy clearly states who is covered by the policy (e.g. the groups mentioned in this column’s first paragraph). Work with your Payroll and/or Expense Reimbursement departments to identify drivers receiving an auto allowance, mileage reimbursement, or business travelers who rent vehicles.
• Get Driver Agreements in place for those drivers. You might find it easiest to simply adapt your current Fleet Vehicle Driver Agreement to address the gray-fleet drivers.
• Implement driver standards and check Motor Vehicle Records to help qualify drivers. I suggest using the same driver standards for both your fleet vehicle drivers and the gray-fleet drivers, as it would be difficult to defend in court the rationale for having a lesser standard for some drivers.
• Require driver training, similar to what you use (or should be using) for your fleet vehicle drivers. This is especially important for addressing drivers who are “high risk”, such as those with multiple moving violations or preventable crashes.
• Document, document, document! Keep records of Driver Agreements, Proof of Insurance, MVRs, and driver training, and make sure those records are easily retrievable.
*Regarding Contractors who on behalf of your company operate vehicles (either their own or ones provided by your company): Unless the Agreement with your contractors specifically makes the contractor responsible for providing adequate – and primary — liability coverage, know that your company will likely be liable for damages incurred in the course and scope of the contractor’s project.
This could be another area where a fleet manager can add value: make sure Contractor Agreements require either adequate, primary coverage that names your company as an insured, or that their drivers meet an acceptable – and well-defined – standard.
I hope you found the above information useful. Fleet managers are often in a unique position to help their employers by applying sound fleet management principles to other, separate-yet-related areas within their companies. Go for it!
Randy Shadley, CAFM, has an extensive background in fleet safety management, both as a corporate fleet safety manager and a manager for a fleet accident and safety provider. He is Account Manager and Fleet Safety Specialist at Corporate Claims Management and leads his own company, ProFleet Solutions, LLC. There, he uses his “big fleet” expertise to help smaller companies improve their fleet and fleet safety programs. Contact him at email@example.com or (303) 472 – 2227 if you would like a free, no obligation review of your current programs.
The information and ideas in this column are intended to help organizations improve driver safety. Always consult with qualified advisors in Legal, Risk Management, HR, etc. to determine the best options for your program.