February 02, 2016 Articles

Clarifying the Standard Employee Exclusions in Commercial Automobile Policies

With coverage or exclusion turning on the answer, several federal courts have taken a new approach in recent years to the age-old question of whether a truck driver is an employee or an independent contractor

by Julius F. "Rick" Parker III[1]

Any attorney who has ever faced a claim in which a truck driver is injured while driving a truck for an insured has faced a wall of confusion. The standard Insurance Services Office (ISO) form commercial auto policy excludes coverage for injuries to employees of the insured. Due to the nature of trucking operations, motor carriers generally attempt to create an independent contractor relationship with drivers. Thus, when the carrier attempts to deny coverage under the standard employee exclusions, a messy and complex factual question arises, one that has confounded courts and practitioners for decades. In recent years, however, several federal courts have taken a new approach to this age-old question. In a very recent, but unpublished, opinion, the Eleventh Circuit Court of Appeals adopted that approach.[2]


Motor carriers run the gamut from single owner-operators making purely intrastate hauls to large companies operating hundreds of tractor-trailers making long interstate hauls. Whether large or small, however, all motor carriers have several incentives to treat the drivers of their trucks as independent contractors instead of employees. First, if the driver is an independent contractor, under the common law, the motor carrier could not be held liable for injuries or property damage inflicted by the driver.[3] Second, a motor carrier is relieved of the responsibility of withholding Social Security and federal taxes (as well as matching the employee’s Social Security and Medicare contributions). Third, most states do not impose a responsibility for employers to carry workers’ compensation insurance on independent contractors. Therefore, by characterizing the driver as an independent contractor, rather than an employee, the motor carrier saves a great deal of time and money, while substantially reducing liability exposure.

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