Canadian carriers hauling freight in the United States should be aware that if their vehicle is involved in a crash, and during litigation a jury finds the trucking company 1% liable, the company is on the hook for the entire judgment.
As nuclear verdicts – where jury awards in civil lawsuits have exceeded US$10 million – become more common, carriers must be vigilant and limit their exposure to vicarious liability, a lawyer and insurance specialist said during a discussion at the Fleet Safety Council’s central and southwestern Ontario chapters event in Cambridge, Ont.
Vicarious liability involves placing the liability for one’s actions upon another person or entity.
While fleet insurance covers liability for actions while operating your commercial vehicle, Roy DeSousa, cargo claims specialist at Old Republic Canada offered a tip for extra protection. “You can take a comprehensive general liability policy to cover negligence caused by an employee.”
Heather Devine, chief legal officer of Traffix, urged carriers working across the border to layer their insurance. “I sometimes think of it as a complicated wedding cake that has different layers. Start with your basic policy layer, and then move all the way up,” she said. “If you have a loss in the U.S., you could be looking at a nuclear verdict.”
Frolic on your own
The actions of a driver significantly influence liability. Devine said safety teams should map out the actions of employees or agents to see where the potential for liability could be removed.
DeSousa and Devine also discussed “frolic on your own” – when an employee or agent is acting on their own and for their own benefit, and employers can remove themselves from those actions.
Devine gave an example of an employee who volunteered to buy food for other employees using the company’s commercial vehicle. He went the wrong way on a one-way street and ended up in a fatal crash killing two people on a motorcycle.
She represented the employer in that case where the question was whether the driver was on a frolic of his own. The food run was not part of his job, but his manager had consented to it. “It was a complex and unfortunate situation,” she said.
Focus on safety
DeSousa provided an example of a carrier that allowed company drivers to take the truck home for the weekend. A driver drove through a stop sign after drinking beer and T-boned a van. Six people were killed.
Devine noted it was important to include rules in the driver handbook about using vehicles when not dispatched that focus on safety and will also help avoid liability when incidents occur.
Carriers must also pay attention when sending administrative staff out for work in their private vehicles, such as making a deposit at a bank. If there is an incident, it is not covered by fleet policy, DeSousa observed. Companies can transfer the risk by sending the employee to the bank in a ride-share vehicle.
Shedding liability
Responding to a question, DeSousa said truckers who bobtail to pick up groceries or drive to a restaurant during their trips are not frolicking on their own because this occurs during their dispatched trip. Liability would be covered by fleet insurance.
If maintenance or mechanic service is part of the company, a way to shed liability is to make it a separate corporate entity and as remote as you can with separate insurance. Plaintiff’s lawyers tend to expand the liability pool and go after the maintenance company to hold them vicariously liable.
Devine suggested that carriers can look at corporate restructuring to protect their CVORs and rolling assets. A catastrophic judgment could close one company. But if the carrier has other companies set up with assets that hold contracts, perhaps all is not lost.
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