Managing Vehicle Liability in Your Dealership - Risk
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Managing Vehicle Liability in Your Dealership

By Randy Dombrowski

Article Date: 11-01-2010
Copyright(C) 2010 Associated Equipment Distributors. All Rights Reserved.


Get serious about your policies for ensuring responsible driving behavior – because one slip could cost you everything.

Providing field service repairs, equipment parts, and prompt equipment delivery is crucial to any successful dealership to meet today's customer demands. To accomplish this, dealerships must keep a vehicle fleet that is both adequate and well maintained. Even more important is having the confidence that an employee operating your vehicle is following state and federal driving laws – along with driving in a safe manner.

Vehicle use represents the greatest exposure to property damage losses and costly liability suits for dealership owners. Recent court rulings involving at-fault drivers being distracted by electronic devices have shown that dealerships can be held liable for the actions of their drivers, resulting in settlements ranging into the millions of dollars. Dealerships can also suffer other costs, including damage to their reputation, interrupted service to customers, increasing insurance premiums, and even the closing of the dealership due to a large settlement exceeding insurance policy limits.

An effective vehicle safety program can reduce potential liability and promote safe driving while protecting dealership assets. Focusing on driver selection, driver training, and electronic device usage are three key areas for you to review.

Driver Selection
The single most important aspect of your vehicle safety program is selecting good drivers. You can control your liability exposure by strictly enforcing driver selection and evaluating these points:
  • Job Application – Obtain driver license information, accident or criminal history
  • Interview – Discuss past accidents, violations, and company safety policy
  • References – Verify prior driver experience n Motor Vehicle Report – Past driving history is indicative of future performance
  • Written and Driving Test – Include driving skills for your vehicles and routes
Define what an appropriate driving record for your dealership is, have the driver sign your safety policy, and keep this information in the driver's personnel file for future reference and re-evaluation.

Driver Orientation and Training
Driver safety training is available through many organizations, websites, and likely your insurance carrier. Studies show that drivers who complete training courses on defensive or distracted driving are involved in fewer accidents and have fewer violations on their driving record. Driver orientation should include:
  • Company policy and cell phone rules
  • Driver safety objectives
  • Criteria for acceptable driving records
  • Vehicle operations, maintenance, inspections
  • Emergency procedures and accident reporting
  • Securing equipment during transport
  • Completion of defensive drivers course
Use of Electronic Devices
Cell phones and other electronic devices are important tools for dealerships but improper use on the road can open the door to negligence. Most states (even some cities and counties) have passed legislation making the use of electronic devices illegal during vehicle operation. Dealerships can be liable for accidents caused by drivers, particularly if they have not been formally instructed about company policies and the dangers of using electronic devices. Establish a written vehicle safety policy and provide documented training for your drivers. Consider the following points when creating a policy:
  • Prohibit the use of electronic devices (even "hands free" calling) while operating a vehicle, unless it's an emergency situation
  • Include specific language into the policy prohibiting phone calls, text messages, Internet use, and all other types of communications
  • Instruct drivers to pull into a safe area off the roadway to complete any calls
By properly managing drivers and taking a proactive approach to safe driving, you can reduce the potential for auto accidents and thereby mitigate liabilities that can devastate your dealership and bottom line.

Randy Dombrowski is an Account Executive for Sentry Insurance – a provider of Property & Casualty coverages for the dealership industry. He can be reached at randy.dombrowski@sentry.com.

This document is made available by Sentry Insurance a Mutual Company and its subsidiaries and affiliates (collectively "SIAMCO") with the understanding that SIAMCO is not engaged in the practice of law, nor is it rendering legal advice. The information contained in this document is of a general nature and is not intended to address the circumstances of any particular individual or entity. Legal obligations may vary by state and locality. No one should act on the information contained in this document without legal advice from competent and licensed local professionals.

THE INFORMATION CONTAINED IN THIS DOCUMENT IS DISTRIBUTED BY SIAMCO "ASIS", WITHOUT ANY WARRANTIES. SIAMCO WILL HAVE NO LIABILITY TO ANY PERSON OR ENTITY WITH RESPECT TO ANY LOSSES OR DAMAGES CAUSED, OR ALLEGED TO HAVE BEEN CAUSED, DIRECTLY OR INDIRECTLY BY THIS DOCUMENT, REGARDLESS OF WHETHER SUCH CLAIM IS BASED ON CONTRACT, WARRANTY, TORT (INCLUDING NEGLIGENCE AND FOR PROPERTY DAMAGE AND DEATH) OR OTHER GROUNDS.  


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