What is Vicarious Liability for Auto Accidents in Maryland?
In the state of Maryland, vicarious liability in an auto accident means that a vehicle’s owner, or an employer, can be held legally responsible for any damages resulting from another person driving.
Whether vicarious liability applies depends entirely on the relationship between the owner and the driver at the exact time of the collision. Maryland divides auto-related vicarious liability into three primary categories.
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The Employer-Employee Relationship (Respondeat Superior)
The most applicable scenario of vicarious liability for employers is when an employee causes an accident. An employer is vicariously liable for a motor vehicle collision if:
The driver was employed at the exact time of the accident (not an independent contractor).
The employee was acting within the “scope of employment,” meaning they were in the act of performing the job duties as outlined by their employment.
A note on commuting in Maryland, an ordinary daily commute to and from your place of employment is generally not considered within the scope of your work duties. If, however, an employee makes a purely personal jaunt during their workday hours (legally termed a “frolic”), the employer is typically not responsible for any accident that results outside of the strict job-related activities.
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The Rebuttable Presumption of Agency (Borrowed Cars)
Most people are pretty lenient about lending their cars to close friends and family members. The good news is that if you lend your car out to someone else, that doesn’t necessarily make you liable just because you are the owner and your name is on the title. Unique to the state of Maryland is a rule known as the rebuttable presumption of agency.
The Presumption - When a vehicle is involved in a collision, Maryland courts automatically presume that the driver was operating the vehicle as the owner’s agent and for the owner’s benefit.
Rebutting It - The best way to get around vicarious liability is to actively present evidence to support that the driver was not acting under the person’s agency (or acting on their behalf or under their control).
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Family Members and Minors
Maryland does not subscribe to the “Family Purpose Doctrine.” It holds that a parent can be liable simply because a member of the family was driving the car. Unlike other states, the parent/owner liability is handled by two specific rules:
Co-Signing a License - Under Maryland Code § 16-107, any guardian or parent who co-signs a minor’s driver’s license application is jointly and severally liable for negligent driving and the actions committed while under the influence by the minor they co-signed for.
Negligent Entrustment - While not strictly vicarious liability (the term used is direct negligence), a guardian, parent, or vehicle owner can be sued if they knowingly give permission to anyone who they know to be unfit, intoxicated, notoriously reckless, or unlicensed to drive their car.
How Vicarious Liability Intersects with Insurance Coverage
Legal liability and insurance coverage are separate but deeply connected concepts in Maryland. While vicarious liability establishes who is legally responsible for a car collision, auto insurance dictates who will actually pay for the damage. In Maryland, legal liability and insurance coverage operate on parallel tracks, which means an owner can face financial consequences through their insurance, even if they escape personal responsibility in a legal courtroom.
The Omnibus Clause
The “Omnibus Clause” in Auto Insurance - Even if the vehicle owner can rebut the presumption of agency (like proving their friend driving their car was not their fault), the owner’s auto insurance policy typically follows the vehicle, not the owner. Under standard permissive-use clauses, the owner’s insurance will still act as the primary coverage for damages.
Nearly all personal auto policies in Maryland contain some version of an “Omnibus Clause” covering permissive users. Therefore, if you give someone permission to drive your vehicle, your insurance policy becomes the primary coverage for any accident they cause. The driver’s own insurance policy typically acts as secondary or excess coverage.
Employer Coverage - Beyond Personal Auto Policies
When an employee uses a company car or vehicle to perform duties within the scope of their employment, a standard personal auto policy will not be enough. If an employee is found to be acting within the scope of their employment duties during an accident, the employer's assets can be in jeopardy.
Maryland businesses looking to mitigate risk can add two types of coverage:
Commercial Auto Liability - It is a type of insurance that covers vehicles that are owned or leased directly by the business and used only for company operations.
Hired and Non-Owned Auto Insurance (HNOA) - This type of coverage provides a safety net for businesses whose employees drive their own personal vehicles for work errands. If an employee causes a collision during working hours, their personal auto policy limit can quickly be exhausted. An HNOA policy is an umbrella action that helps to protect the business from vicarious liability claims that follow.
Limits, Exclusions, and Joint Liability
In more severe accidents, there are times when damages can exceed the primary vehicle policy limits. Maryland holds vicariously liable employers or co-signers jointly and severally liable, so the injured party can pursue both the driver’s insurance limits and the vicariously liable party’s business or personal assets to recover all of their losses.
Additionally, insurance companies can deny coverage entirely if the vehicle was operated by an explicitly excluded driver named on the policy. They can also deny coverage if the vehicle was being used for unauthorized commercial purposes at the exact time of the collision.
Vicarious liability is a term that changes the rules for who is responsible for an auto accident in the state of Maryland. If you lend your car to a friend, family member, or an employee, make sure you know what your liability is if something happens and they are at fault.
If you are involved in a car accident in Maryland and need someone in your corner to protect you, contact us today!