Car Accidents in Company Vehicles

By FindLaw Staff | Legally reviewed by Stephen Smith, Esq. | Last updated December 15, 2021

Driving the company car has its perks. You don't have to pay for gas out of your own pocket, and you don't need to worry about putting miles or wear and tear on your own vehicle. But what happens if you have a car accident in a company-owned vehicle? Whether it's a fender bender or a major collision, who pays for it? You? Your employer's insurance? The question will turn on whether or not the employee was acting within the scope of his or her employment duties during the time of the accident.

The following article will explain the theory of vicarious employer liability and discuss exceptions to that rule, along with where to go if you need legal help if you have a car accident in a company vehicle.

Vicarious Liability

In most cases, an employer will be responsible for the actions of their employees under an age-old doctrine of "respondeat superior" or, in plainer English, "vicarious liability." Under vicarious liability, employers are liable for their employee's negligent actions or non-actions while working within the scope of their employment.

For example, a truck driver making a delivery during business hours fails to stop at a red light and hits a pedestrian. Here, the employer will likely be liable because the employee was acting within the scope of his duties and wasn't committing any crimes.

It is important to keep in mind, however, that for an act to be within the course of employment, it must either be authorized by the employer or be so closely related to an authorized act that an employer should be held responsible. Another important factor is the type of insurance policy the employer carries. Many companies have collision coverage which extends to employees, but some don't. If you drive a company vehicle, you will likely want to clarify these terms with your employer ahead of time.

Employees, Company Cars, and Criminal Activities

Picture this. A salesperson regularly uses the company luxury vehicle to take clients to business lunches (with the company's consent). On one particular day, the sales person decides to take a very important client out to a fancy dinner and orders several expensive bottles of wine to impress the client and hopefully generate more business. After dinner, the salesperson (driving the company car) is driving back to the office and hits a parked motorcycle, breaking her arm as a result of the crash.

Perhaps she had too many glasses of wine, far exceeding the mandate of her employer, and was driving under the influence of alcohol (DUI). Clearly, it is not within the scope of an employee's duties to commit a crime, no matter which way you try to spin it. The employer can rightfully refuse to indemnify the motorcycle owner and the salesperson may not be able to make a claim against the employer's insurance company or through workers' compensation insurance.

Going on a Frolic During Business Hours? Think Again

Considering taking your employer's truck out for a spin, maybe after work or even during your shift, but not for any work-related purpose? Think again. An employee who decides to do their personal errands while on company time and causes an accident might not be protected from personal liability either.

Known as a "frolic" in some jurisdictions, it doesn't matter if the employee is doing this on company time or not. The employee is acting in his or her own personal capacity and not at the instruction of their employer. Here again, the employer may not be legally required to pay for any damages or injuries the employee causes as a result of a non-work sanctioned activity or a frolic. Most companies have clearly written policies on these issues, and employees should be familiar with them before using a company vehicle for any purpose.