What’s Your Biggest Liability Risk?
Alarm companies provide 24/7 security and peace of mind to their clients. However, in the day-to-day effort of delivering this service, they themselves are exposed to a variety of risks, including worker injuries, property damage, lawsuits, errors and omissions and negligence.
Which one keeps you up at night?
Today, driver safety has become one of the biggest risk exposures for employees of the tens of thousands alarm contractors operating across the U.S., which represents more than 200,000 employees. Every day, thousands of these professionals take to our nation’s roads and highways to serve their customers. Aside from the daily road and highway hazards their drivers routinely face, the greatest—and 100% preventable—threat to their safety is using handheld mobile devices while operating a company-owned vehicle.
The auto insurance industry loves statistics, and here’s two that make a strong point: According to the National Safety Council, mobile devices are a contributing factor in 6 million accidents per year, or 64% of the total number of road accidents in the U.S.. Also, the odds of an accident occurring for any reason increased by 23 times when texting and driving.
Courts are aware of these statistics and are coming down harder on corporate defendants involved in auto accidents with what is increasingly found to be “preventable” behavior. Mobile device usage records are frequently discoverable at trial, and a company can be subject to increased liability and damages when distracted driving is found to be involved in a crash during the course and scope of employment—particularly when operating in a state with a “hands-free” law. The consequences can range from catastrophic property and personal injury and loss of life, to increased legal settlements and fines, to horribly increased insurance premiums for Auto as well as Workers Compensation.
My office has personally seen this growing trend of larger awards relating to company responsibility regarding employee use of mobile devices. In one instance, an employee of a major paper company was discovered to be using a company-issued mobile device when he rear-ended another driver, which resulted in serious injuries that eventually required the other driver’s arm to be amputated. The company was forced into a $5.2 million payment to settle the case.
What can be done to prevent these claims? The insurance carriers we work with all generally preach the following measures:
- Written policies addressing mobile devices: essential—but not a guarantee of legal protection. While a policy does not fully prevent the company from being held responsible, it does show some consideration and responsibility on behalf of the organization, which may lessen damages.
- Policies that are too strict can be problematic. If the policy is unrealistic, or if all employees are breaking a strict or zero-tolerance policy and management is aware, this can create a serious issue. Plus, it can undermine adherence to other policies and procedures; that is, if employees know they can ignore one policy, they may come to believe that it is OK to ignore others as well.
- Stress the importance of the policies as an important part of the company’s culture. All employees need to be aware that these policies are there for a reason and are non-negotiable.
- Policy enforcement is vital. If the company has a distracted driving policy but has never taken any steps to enforce it, this creates a substantial exposure risk when an incident occurs.
- Provide driver training and continual monitoring. Provide defensive driving and other safety courses and refreshers. Also, real-time telemetry data (black box) recording and reporting has become more affordable, and the cost can often be partially offset by resulting credits on a company’s auto insurance premiums.
- Run MVRs pre-hire and annually. Some states have programs that will automatically notify employers of certain activity on a MVR (motor vehicle record). The EPN (Employer Pull Notice) Program through the California DMV is one example that we’ve helped customers enroll in.
- Consider increasing your insurance with an Umbrella. Companies with multiple vehicles should consider an Umbrella on top of their Commercial Auto *hugely important*. As mentioned, Auto liability damage awards continue to rise across the nation, and there are many more claims paid over $1,000,000 than previously.
So of the 7 measures above, only 1 was related to insurance. The rest are all about prevention, which often goes hand in hand with obtaining affordable coverage. Our brokers specialize in helping alarm companies get the right insurance protection, we can also help you implement the preventative measures that will help keep you from having to use it. If you’d like help implementing any of the items above, give us a call, we’re here to help.
About the Author
Larry St. John is a 20+ year veteran of insurance and risk management for the construction and electronic security industries.
He can be reached at LStJohn@eclipseinsurance.com