A lawsuit for negligent entrustment arises when the owner of a motor vehicle entrusts (i.e., giving something you own to another person for a temporary time) it to someone the owner knows to be incapable of using the vehicle properly and a third party is injured.

All companies are responsible for hiring qualified employees. If a company has no formal hiring policy, the legal theory of negligent entrustment suggests that the company could be exposed to liability for the acts of its employees.

In employment situations, negligent entrustment is a legal term meaning an employer left a dangerous item such as a gun or car with an employee whom the employer knows or should know is likely to use it in an unreasonably risky way.

Typically negligent entrustment arises in business situations when:

  • An employer carelessly allowed or entrusted an employee to use an item that could cause harm
  • The employer knew or should have known of the incompetence of the employee
  • The incompetence of the employee was a substantial factor in causing the injury

Under negligent entrustment laws, an employer may be liable for damages caused by an incompetent employee. An employer has to hire competent and qualified employees to represent the company. Punitive damages may be awarded if negligent entrustment is proven. Punitive damages are not commonly covered by insurance policies. Some states do not allow for punitive damage coverage. Even if punitive damages are covered, the judgment may exceed policy limits.

What Are Common Situations of Negligent Entrustment?

If an employee drives in a business context, the employer may be at risk for a negligent entrustment charge if:

  • The driver is ruled incompetent
  • The employer knew or should have known of this incompetence
  • The employer entrusted the vehicle to the driver within the scope of their employment
  • The driver was negligent and caused the accident. Some states do not require negligence by the driver

Employers must pay particular attention to the qualifications of employees to avoid the risk of negligent entrustment. Unpaid or volunteer workers, nursing home personnel, childcare personnel, employees exposed to children, delivery personnel, machine operators, out-of-office service and repair personnel, private residence installation personnel, sales personnel, security personnel, nonprofit organization personnel, campus organization personnel, personnel who carry a firearm, and academic or community service organizations must be particularly careful for employers to avoid liability for negligent entrustment.

What Qualifications Should I Consider When Entrusting Employees?

Organizations should consider the following when entrusting employees with handling potentially dangerous situations:

  • Training and credentials
  • Restrictions on employment
  • Disqualifications under federal, state, or local regulations
  • Prior history of accidents and violations
  • Skills for the situation

What Do You Have To Prove For a Negligent Entrustment Lawsuit?

Liability for negligent entrustment is determined by applying general principles of negligence. To prevail on a theory of negligent entrustment, the injured party must show that the vehicle’s owner knew or should have known that the person to whom the vehicle was entrusted was reckless or incompetent.

What Are Some Examples Of Negligent Entrustment?

There are two approaches to establishing liability under a theory of negligent entrustment, which differ depending on the state in which you live:

  • Actual knowledge: The owner is liable when he entrusts his motor vehicle to a person whom he actually knows is incompetent or unable to operate the vehicle the same as an everyday driver and gets in an auto accident with a third person. An example of this would be giving a vehicle to one who is not suited to be driving it because of the driver’s youth, inexperience, mental capacity, or poor driving record.
  • Constructive knowledge: In situations where a driver’s incompetence is not apparent to the owner at the time of entrustment, the owner will still be liable if he knew of facts or circumstances relating to the driver’s inability to operate the vehicle properly and an accident occurs with a third party. If the owner knew of specific instances of recklessness on the driver’s part of the driver’s incompetence was generally known in the community, the owner may be liable for negligent entrustment.

Are There Tips for Company Driver Hiring Programs?

A company driver-hiring program should be developed for any business that includes regular driving by employees. Regular driving record evaluations and training policies should be uniformly administered. Federal or state regulations specify driver hiring and training programs for specialized driving, such as Commercial Driver’s Licenses.

Even there are no applicable regulations for your business, training programs should be implemented to avoid negligence charges. Best business practices may not always prevent accidents, but training shows employees that the business is serious about safety.

Implementing proactive company policies may limit your company’s liability if an accident occurs.

Develop a company policy for Motor Vehicle Records (MVR) evaluation that employees must sign. Evaluate the records at the time of hire and annually after that. If required by federal or state law, develop a company policy for physical examinations that must be adhered to by your employees. Develop a company policy for the personal use of company vehicles that your employees must sign. Consider developing a company policy for the use of cell phones while driving. Employees must sign that. A company policy for occasional drivers should also be in place. Provide driver training programs.

Perform personal interviews and be diligent about referencing criminal background checks. Develop a documented training program and establish written policies for each topic.

What Does Negligent Entrustment Have to Do With Insurance?

Many jurisdictions have case law exploring the relationship between negligent entrustment of a motor vehicle and typical exclusion clauses in household or general commercial insurance policies for claims arising from using a motor vehicle. Insurers typically distinguish between household insurance, general insurance, and motor insurance.

Damage caused to a third party through driving or other motor vehicle use is usually dealt with through motor insurance. This distinction gives rise to debate whether an entrustee’s dangerous driving should be treated as a failure in the entrustee’s use of the vehicle or an example of negligent entrustment on the part of the entrustor.

How Does Negligent Entrustment Compare to Vicarious Liability?

Vicarious liability is separate from negligent entrustment. Vicarious liability provides that an employer is liable for the torts of an employee even if the employer did nothing wrong.

Negligent entrustment requires proof of actual negligence on the employer’s part before any injury occurred when the entrustee was trusted with a dangerous item.

Do I Need An Attorney To Help Me With A Negligent Entrustment Lawsuit?

Suppose you are involved in an automobile accident and believe that you have been injured by someone driving a vehicle owned by someone else. In that case, you may be able to sue the actual owner of the vehicle under a theory of negligent entrustment. Before pursuing such a lawsuit, however, you should retain an attorney.

An experienced automobile accident attorney can accurately inform you whether you have a case against the true owner of the vehicle. He can also aid you in discovering if the owner was negligent in entrusting the vehicle to the person responsible for your injuries.

Use LegalMatch to find a personal injury attorney near you today.