For many businesses—whether delivering goods, transporting equipment, or simply sending employees on the road—hiring safe, reliable drivers is essential. But what happens when a business puts someone behind the wheel who has a less-than-perfect driving record? The risks go far beyond the occasional fender bender repair bill. Under North Carolina law, a careless hiring decision can expose a business to lawsuits, higher insurance costs (or loss of insurance altogether), reputational harm, and in some cases, long-term financial instability.
So Sue Me
In North Carolina, a business can be held liable under the legal doctrine of negligent entrustment if it allows an employee to drive a company vehicle when the business knew—or should have known—that the driver was unfit or unsafe.
For example, if an employer hires a driver with multiple speeding tickets, a prior DWI, or a suspended license, and that driver causes a serious accident while on the job, the injured party may not only sue the driver but also the employer. The claimant would argue that the business negligently entrusted a vehicle to someone who posed a foreseeable risk of harm.
Courts in North Carolina look at whether the employer had actual knowledge (or should reasonably have had knowledge) of the driver’s poor record. In practice, this means companies are expected to screen drivers thoroughly before handing over the keys. Ignoring red flags can be legally—and financially—devastating.
In addition to negligent entrustment, North Carolina businesses can be liable for their drivers' actions under other legal doctrines. For instance, an injured party may assert that the business is liable for negligent hiring, retention, or supervision of the at-fault driver. Further, the negligence of the at-fault driver typically can be imputed to the business based on the doctrine of agency, making the business liable for any harm caused.
Jeopardizing Your Safety Net
Insurance is supposed to be the safety net when accidents happen, but a poor driver history within a company can compromise both coverage availability and affordability.
- Higher Premiums: Insurance carriers review the driving records of employees who will operate company vehicles. A pattern of accidents, citations, or DUIs among employees can cause premiums to skyrocket.
- Coverage Limitations: Some insurers may decline to cover certain drivers altogether, requiring businesses to restructure their operations or assign duties away from risky employees.
- Non-Renewal or Denial: In severe cases, a business could be denied coverage or dropped altogether if its drivers are deemed too risky to insure. Without proper commercial auto insurance, the company is left financially exposed.
- Direct Financial Responsibility: In the case of serious personal injuries or death, a business could be liable for monetary damages above the limits of their insurance, should the damages exceed the available insurance coverage.
Word on the Street
Beyond lawsuits and insurance premiums, businesses may suffer reputational harm, lost contracts, or reduced client trust if they become known for unsafe driving practices. In industries like logistics, transportation, delivery, or construction, for example, safety records are not just internal metrics—they are often reviewed and scrutinized by potential clients, government regulators, and, in some cases, even the general public.
Practical Steps to Reduce Exposure:
- Screen driving records before and during employment
- Establish clear standards for acceptable driving histories and reporting
- Provide ongoing safety training and monitoring
- Work with insurance professionals routinely to ensure proper coverage
Bottom Line
Hiring decisions matter. A driver’s record is not just a personal liability—it can become your company’s liability. Handing the keys to a driver with a checkered record is more than just a gamble—it can amount to negligent entrustment and expose a business to lawsuits and crushing insurance problems. Prudent hiring practices, setting strong standards, rigorous monitoring, and proactive insurance planning are not optional; they are essential for any business that relies on (or simply allows) employees to get behind the wheel. When it comes to protecting your business, the safest road forward is the one paved with informed risk management decisions.
When the financial stability of your company is on the line, having trusted risk-management-minded counsel can make all the difference. Ward and Smith’s Insurance Counseling and Recovery team works with businesses to evaluate and navigate insurance complexities and coverages, address insurance disputes, and hold insurers accountable so that your safety net provides real protection. Our attorneys are here to help you prepare, respond, and recover—so your business can stay on the road with greater confidence.
