Employee held liable but find the employer has no insurance or can avoid meeting the cost!

A lot of employees believe that they cannot be held personally responsible if they make a mistake in their work that causes damage or injury to others, as their employer will be liable, and the employer’s insurance will protect them.

In the vast majority of cases this is in fact true, but you cannot and should not rely on this.

I provide a few examples:

Case #1

In the first case, which I think from memory I have written about before, a truck driver, while in charge of a B-double prime mover and trailers, changed lanes and hit a vehicle travelling beside them. The other driver was found not to have contributed to the collision.

The difficulty for the driver was that his employer was in financial difficulty, and had failed to renew the commercial motor insurance on their fleet of vehicles, including the one being driven by the this particular employee.

The company went into liquidation and was ultimately wound up. This left the driver without any insurance or ability to seek recovery from the employer. In the end, the insurer of the innocent third party sought recovery from the negligent driver and was successful.

Case #2

20 odd years ago, an employee was instructed to install a stone statue outside a recreational club. 20 years later, children were climbing on the statue and the statue fell over causing serious injuries to at least one of the children. The employer had closed his business down several years before the collapse of the statue, and with this the employer stopped paying for public and product liability insurance around 4 years before the accident.

The particular policy was an occurrence wording which required the injury or damage to have occurred during the period of insurance.

It was found in the Court of Appeal that the statue was poorly constructed, and that had it been done correctly, the statue ought to have stood for at least 50 years without any maintenance.

Even with the club being deemed by the court to have contributed to the accident, the employee was found to be personally responsible as well, with the award against the employee being in excess of $1,000,000.

Case #3

The third case is slightly different. Security guards were asked to assist with a problem at a neighbouring premises and it was found that they used excessive force in their handling of the matter. The employer here successfully argued that the security guards were acting well outside the company rules and the training that they had provided, and as such the employer was found not to be legally liable for the injuries sustained to the person by the security guards. Here the guards were held personally responsible but unlike the earlier two cases, they had no assets and were men of straw and so the injured party failed to recover.

Take-away lessons

At the end of the day, each and every one of us are responsible for our actions or inaction, and can be held personally responsible if our actions or inaction causes loss, damage or injury to others.

Purchasing run off coverage for Public and Product Liability Insurance is equally important as it is for Director’s and Officers Insurance and Professional Indemnity Insurance.