Q. If our employee has an accident while talking on a cell phone in a company car, is the company liable to the injured party?
A. Possibly. This question involves several issues concerning tort liability, agency law and insurance coverage.
In regard to insurance coverage, the company’s policy will apply because a company car was involved in an accident. Depending on the circumstances of the accident and policy language, the company’s policy may have primary coverage and the employee’s policy secondary coverage—or vice versa. Either way, the company should report the accident to its insurance company.
In regard to liability, the employee and (possibly) the company are liable only if the employee was negligent in driving the car. Generally, principles of tort and traffic law will apply. A new issue for the courts is the impact of the employee talking on the cell phone at the time of the accident.
At this time, there is no ban on cell phone use and driving in North Carolina, except for drivers under the age of 18 and for school bus drivers. Thus, talking on a cell phone while driving does not automatically constitute negligence. Instead, the driver’s overall conduct, including cell phone use, would be evaluated under a negligence standard.
If the employee driver is negligent, is the company also liable? That depends on whether the employee was engaged in company business at the time, and thus was the company’s agent. If the employee is on a company trip or is talking about company business on the phone, then the company will likely be jointly liable with the employee.