Who Pays For A Damaged Business Vehicle
If a business is formed as a partnership, questions may arise regarding the division of assets. For example, if a company vehicle is involved in a car accident, who pays for the damages? Is it shared? Does one person cover it? A car accident lawyer is here to explain how liability works in these situations.
Shared Vehicles
For small businesses in particular, it is common practice to have a shared vehicle. This can be for service providers, contractors, or local deliveries. Difficulties may arise due to ownership of the car, as it can be co-owned, owned by the business, or even owned by a specific partner. However, the basis for this is that the vehicle is shared, so despite ownership, it is used within the business for multiple reasons. In fact, it might even be used for personal errands. These types of informal arrangements can lead to significant complications if an injury accident occurs.
Injury Liability
If an injury accident occurs, the person injured must demonstrate that negligence or neglect led to their injuries. For example, if they have a dashcam and it shows the other driver was texting at the time of the accident, that proves negligence. Now, we have to take this a step further for a business vehicle. With negligence proven, now it is time to determine liability. Each case and situation is unique, but in general, if the driver in our example was texting on the road for business purposes, the partnership as a whole can be held liable, regardless of the number of partners involved in a business; they may be held liable. Depending on the jurisdiction, comparative fault may come into play when liability is apportioned among various involved parties, but this depends on your state’s laws. This is in the event that your employee hits someone else. This example does not cover injuries to passengers, business partners, or third parties, such as pedestrians.
Coverage Gaps
Every detail of the case will need to be examined to determine liability. For example, whoever holds the title can be held liable, so it could be an individual’s name or a single person’s name that determines who the injured party can go after in a case. Insurance also plays a significant role in this scenario, as personal auto policies may deny coverage if the car was being used for business purposes at the time of the accident, or vice versa, with a business insurance policy and someone using the vehicle for personal use. Depending on these factors, the injured party can go after individuals or the business itself.
Safeguards
According to our friends at Cohen & Cohen, it is essential to have clear contracts and detailed outlines of vehicle usage before it hits the road, in case it is involved in an accident. Partnership agreements should clearly outline which vehicles are included and specify who is liable for any issues that may arise. Additionally, the correct insurance policy needs to be selected. On the business side of things, forming a limited liability protection partnership can ensure that the partners are not held liable for issues. Additionally, internal protocols should be established in advance in case something does happen.
If you are considering starting a business that will involve a company car, contact a lawyer near you to ensure you and your business are protected against accidents.
