If a Small Business Employee Gets into an Accident, Who Has to Pay?

Car accident insurance

Business owners are generally not alright with having to pay the tickets their employees get when driving a company vehicle. Unless there is a written agreement in place, the business may have to pay the ticket if it was issued against the company’s vehicle. On the other hand, if a speeding ticket was issued against the driver, then the driver would generally have to pay it.

Who is liable for an accident?

If an accident occurs when an employee is driving a company car, it’s key from an insurance perspective to establish which party was liable. A core part of this is determining if the employee act within the scope of employment. In other words, did the employee get into an accident while taking care of business related issues or was he driving the car for his own personal use?

In most states, the respondeat superior principle applies if the employee was doing work-related tasks. This means that you, as a business owner, would have responsibility for any damages that the accident causes to your own car and to the other party involved.

Luckily, there are insurance companies that issue policies for exactly this type of situation. You can get Commercial Auto insurance if the car is company-owned or Hired & Non-Owned Auto insurance if it’s not. Hired & Non-Owned Auto insurance offers protection for vehicles that are rented or hired by a company, as well as vehicles that are used by the company without but others own (for example, if employees use their own vehicles for delivery).

It’s essential to note an important limitation of these types of auto insurance: they generally do not cover any damages that occur when the employee is driving the company car (owned or not) for personal purposes.

Such insurance policies can cover both property damage and bodily injury thus protecting the business from paying the costs related to damages and injuries. The insurance may also cover some of the tickets that employees get when driving for the business.

Recouping costs

One question that may be asked by employees who get a ticket is whether the cost of a ticket can be deducted from their wages by the employer. Employees are generally protected in this case because the company is not allowed to deduct anything from an employee’s salary without written permission. The employee can be fired, though, if they were driving recklessly or had caused the incident somehow.