Question: I am the sales manager of a well-known consumer goods company. Our reps operate across the island. We give them cell phones to keep in touch with the office.
In some cases, we even pay for "hands-free" phones in their cars. This allows us to converse while they are on the roads. Sales persons drive their own vehicles. What are the effects of our policy on the insurances of the reps?
-- R. W., Kingston C.S.O.
Answer: Your company's policy is based on the wrong argument. Using a hands-free cell phone while driving may not be much safer than a hand-held phone. This is according to a new study reported in the Journal of Experimental Psychology Applied (Volume 9, No 1).
A team, headed by a University of Utah psychologist David Strayer, found that conversations on hands-free phones slowed the reaction times of drivers. They also increased the risk of crashing. The study was conducted using driving simulators.
Participants' ability to remember billboards declined quite sharply while they were in the cell phone zones. This was even though they looked at the signs just as often as when they were not in the zones. Talking on a cell-phone causes a condition known as inattention blindness. It distracts attention from driving. This study suggests that your sales reps are equally at risk when using hands-free or hand-held phones.
LEGAL LIABILITY
Cell phones are quite new in Jamaica. Let's examine the effects of your company's policy on its legal liability using some general principles of law. Employers can be held liable for the actions of their employees.
The liability of the employer is based on a doctrine called respondeat superior. It is used in a master-servant relationship. When an employer (or master) acts through an employee or agent (the servant) and liability is incurred during the agency due to the fault of the agent, the employer (or master) must accept the blame.
Your company is very exposed when these principles are applied to its cell phone policy. It runs the risk of being sued if a sales rep. injured a third party while driving his vehicle on company business. This is irrespective of whether the person was using a cell phone. If he or she were conducting business using a cell phone [supplied by your company] the company would find it even harder to escape blame - under the respondeat superior doctrine.
COULD END UP PAYING THOUSANDS
Furthermore, the company could end up paying thousands or even millions of dollars to claimants. While this has not happened in Jamaica involving the use of a cell phone as yet, the principle is well known.
Remember, there are a lot of bright, young and hungry lawyers out there. Nearly three out of every 10 drivers, by my count, uses a cell phone. These conditions create a great opportunity for lawyers to earn megabucks and make big names for themselves.
Your company's cell phone policy will have more impact on the company than on the insurance's of the sales reps. Their insurers are unlikely to refuse to pay claims if the reps caused collisions while using either hand-held or hands-free phones.
There is no local law that bans the use of cellular phones while driving. The police tried hard to prosecute a motorist for using a cell phone a few years ago. The courts, however, threw out the case. Even if such a law existed, insurance coverage would still be available. This is based on the same principle that applies to manslaughter. It is a crime, but motor policies do not exclude claims linked to it.
Make sure that your company buys a motor contingent liability policy. As motor insurance goes, it is very cheap. This would provide protection in the event that the policies of the sales reps did not operate when called upon. It would also cover the liability arising from the master-servant relationship.
The limits under this coverage should be in the tens of millions. Ask an independent insurance professional to vet the policies of the salespersons.
You want to ensure that your company and its employees are not taken to the cleaners in the event of motor accidents - those caused and not caused by the use of cell phones.
Cedric E. Stephens provides advice on risks and insurance. If you need free information or advice to solve a problem, write to The Financial Editor or, contact Mr. Stephens directly at aegis@cwjamaica.com
