Personal Injury | May 14, 2025 by JOSHUA D. ANDERSON

Who Pays For a Car Accident in a Company Vehicle?

A car accident between two personal vehicles is pretty straightforward. The at-fault party is liable, and either they or their insurance company has to pay for the damages. When both parties are partly at fault, or there’s a third party involved (say, a jaywalker), determining liability and settling damage claims is a little more complex but still fairly straightforward.

However, a car accident in a company vehicle is more complicated. While the driver of the company car may be at fault, both the driver and employer may be liable for the damages they cause. In short and for example, vicarious liability means that if you’re in a car accident while driving the company car for official company business, your employer may be liable for damages you caused as the at-fault party. However, if you were using the company car for personal reasons, it’s unlikely your employer would be found liable.

What goes into determining fault in a car accident with a company vehicle? When is the employer liable, and when are they not?

Establishing Liability in a Car Accident

Every car accident has a liable party or liable parties, the person or people who are legally responsible for the accident. Depending on the circumstances, one driver can be liable, or both drivers may be partially liable. In some cases, the passengers, pedestrians, vehicle manufacturer, or the city that owns the road where the accident occurs can be liable for part or all of the accident. Determining who is liable for a car accident is critical because the person or persons are also liable for the damages and injuries the accident caused.

In many respects, an accident involving a company car is no different. The liable party must pay for the damages. However, depending on the circumstances, the employer could be held liable for the accident.

Washington State uses the vicarious liability principle. In short, vicarious liability means that if you’re in a car accident while driving the company car for official company business, your employer may be liable for damages you caused as the at-fault party. However, if you were using the company car for personal business, it’s unlikely your employer would be found liable.

Who Pays for Damages in a Company Car Accident?

Paying for car accident damages is generally straightforward in that the liable party turns to their insurance or pays out of their pocket. However, if a company car is involved, the specifics of the accident determine who pays what. To be clear, the following examples assume the company car is covered by the employer’s commercial auto insurance.

At Fault Driver Using a Company Car for Work

When the at-fault driver is using a company vehicle for official work purposes at the time of the accident, the employer can be held liable for the damages. In this case, the employer’s insurance should cover the damages and medical expenses.

Driving a Company Car and You’re Not the At-Fault Driver

If you’re driving a company vehicle and you’re not at fault for the accident, the liable party’s or parties’ insurance company would pay for any damages to the company vehicle as well as your medical expenses. 

At Fault Driver Using a Company Car for Personal Reasons

When the at-fault driver is using a company vehicle for official work purposes at the time of the accident, the employer can be held liable for the damages. In this case, the employer’s insurance should cover the damages and medical expenses.

If the at-fault driver doesn’t have auto insurance coverage, it’s still unlikely the employer would have to pay for the damages since the employee wasn’t engaged in official work-related duties. In this case, the employee would likely have to pay out of pocket for the damages.

However, if the employer authorized the employee to use the company vehicle for personal use or failed to restrict employees from using company cars for personal reasons, the employer may be held liable for the damages.

When Does Vicarious Liability Not Apply to a Company Car Accident?

Using a company car for personal reasons is one instance when vicarious liability doesn’t apply to a car accident, but there are several other circumstances when an employer may not be liable for an accident involving a company vehicle.

Intentional or Criminal Acts

An employer cannot be held liable for a car accident in a company car if the at-fault driver commits an intentional or criminal act, even if the employee is using the company car for company business.

For example, if the employee commits an act of road rage and rams another vehicle, it’s unlikely the employer will be held liable for damages. Likewise, if an employee commits a crime like fleeing the police during a traffic stop or stealing the company car, vicarious liability doesn’t apply.

Independent Contractors

Vicarious liability also generally doesn’t apply to independent contractors, which means if the independent contractor is at fault, they’ll use their insurance company to cover the damages. However, in some cases, an employer can be liable for an independent contractor’s accident. For example, if the company that hired the independent contractor didn’t check the contractor’s driving record and missed the fact that their driver’s license was suspended, the employer may be held liable for damages.

Frolic and Detour

Washington State also recognizes “frolic and detour,” and depending on what the employee was doing at the time, vicarious liability can apply.

Frolics and detours are things employees do that aren’t part of their official duties. A detour is brief, say, grabbing coffee on the way to a staff meeting, while a frolic is longer, like taking an extra-long lunch break to watch a baseball game.

As noted above, if an employee is driving a company car for company business, vicarious liability generally applies, but not when the employee uses the company car for personal business. But when an employee is using a company vehicle for company business and is attending to personal business, the line isn’t as clear. That’s where frolic and detour come in.

Let’s say an employee is driving a company vehicle for company business but stops to grab some coffee at the thrive-thru. This takes 10 minutes, and as the employee pulls into traffic, they rear-end another car. Because this was a brief interruption to the work day and happened while the employee was performing job duties, this would likely be categorized as a detour, and vicarious liability probably applies, even though the employee was doing something personal.

On the other hand, a frolic is usually a more substantial or longer interruption to the workday. For example, an employee is driving the company car on company business, but they stop at their child’s school to watch a performance, which takes about 90 minutes. As the employee is pulling out of the parking lot, they sideswipe another vehicle. In this instance, vicarious liability may not apply because of the length of the interruption and because they were doing something personal.

Anderson Law | Injury Attorneys Can Help

Establishing vicarious liability or direct negligence after an accident with a company car can be challenging. Whether the driver was on official company business or a personal errand factors into which party or parties are held liable for the car accident.

Whether you were driving a company vehicle or someone driving one caused your car accident, a knowledgeable and experienced car accident lawyer can guide you through the complexities of collisions involving company vehicles. The team at Anderson Law Injury Attorneys can provide you with the expertise you need after a car accident with a company car and help you pursue fair compensation for your lost wages, medical bills, and other expenses. Contact us for a free, no-obligation consultation today.

The information contained on this website is intended for informational purposes only, and is not legal advice. Nothing in this website establishes an attorney-client relationship between us. Different facts can dramatically affect a legal opinion. You should consult an attorney for legal advice that pertains to your personal situation.