Car Insurance Employer Indemnity

HonalD

My employer insists on all employees putting an indemnity clause on their car insurnance for trips taken for work purposes. I believe this is standard practice.

If I am asked to drive collegues to a training course (in order to save expense claims) and an accident occurs causing injury to one of the passengers. Is this a workplace accident? Does it over-ride the indeminty clause?

Am I liable? If they die or are injuired, can I be sued? Just wondering?

NUTLEY BOY

This is very interesting and tricky.

I do not know if your employer's request is standard practice. Personally, I don't like the idea and would not agree to it. I see this as a cheap cost-cutting exercise and an attempt by your employer to evade responsibilities !

My thoughts are these ;

1. Generally, an employer, in his capacity as an employer, has a duty of care to all employees.

2. Your employer, in his capacity as an employer, is vicariously liable to any employee injured negligently by a fellow employee in the course of work.

3. An employer who is vicariously liable to an employee because of a fellow employee's negligence does have the right to seek indemnity, in turn, from the negligent employee. Refer to Romford Ice & Cold Storage Co v Lister [1956] UKHL 6 (20 December 1956).

4. Motor insurance policies could cover this risk BUT you need to be very clear as to what your employer is asking and what your motor policy actually covers.

5. Your motor policy would need to cover USE for the business of your employer.

6. Separately, but additionally, your motor policy would need to cover the LIABILITY of your employer arising from the use of your vehicle on his business.

7. There is a distinction in the minds of motor insurance underwriters between USE and the parties whose LIABILITIES are covered. Read the small print on a motor insurance certificate (not the policy !) to see this point.

8. If you receive expenses for conveying colleagues in the course of business you would need to be very careful that you don't fall foul of the exclusions that could cause your claim to be refused. Specifically, it might be construed that you are using the vehicle for hire or reward or the carriage of passengers for hire or reward. In plainer English, if your employer is effectively using your car as a taxi you might not be covered. Read the EXCLUSIONS section of a motor insurance certificate for plenty more examples of such potential traps.

9. If you are driving colleagues to a course as a gratuitous act of one person giving a lift to another that should be covered under a motor insurance policy. What troubles me is that the scenario you have depicted seems to put the situation beyond a casual situation.

10. Giving lifts to colleagues can be ambivalent in terms of whether the act is one in the course of work or not.

11. If you are driving to your office and stop to pick up a colleague who lives nearby that would probably constitute basic commuting. In this case I would expect no liability to attach to the employer and that you would be covered under the policy for your liability.

12. If you are driving to a specified place on your employer's business and a colleague is a passenger who is required to be present in the vehicle I would expect the employer to be vicariously liable if you crashed the car. As described at 3 above your employer might seek recovery, in turn, from you. However, if your motor insurers have not agreed to cover this type of risk you might find yourself stuck to pay this from your own funds.(The process by which this could arise is circuitous and I won't bore you with it but it could happen.)

13. To protect yourself I would insist on the employer giving you a written request as to precisely what he wants in relation to your insurance. When you get that refer it to your insurance company, in writing, and ask them to confirm that they will cover this. Be extremely careful to get the reply from the insurers in writing. ABSOLUTELY NEVER take a reply to a query like this from an insurance company unless it is in writing or you are asking for trouble !!!

14. The insurers might be happy to cover this in which case there should be no problem. They might ask for an additional premium, which I would ask the employer to pay.

15. Personally, I would not put myself at risk in this situation and would simply not drive colleagues or my car for work related purposes.

Generally, I don't like what your employer is doing and would regard the arrangement as messy. However, I might be in the wrong as it might be normal practice.

You might try moving this post to the Biz – Personal – Banking & Insurance & Pensions threads to see if any of the insurance guys have any better or more specific information.