US jury finds insurer liable for crash by deployed tow truck

Patrick Bracher, Norton Rose Fulbright

In mid-March 2024 a Kentucky state jury found liability of $164 million against an insurance company which had sent out a tow truck on a roadside assistance job which rear-ended a motorist leaving her quadriplegic. In the end of the jury awarded the maximum amount she claimed, namely $111 million. The jury found that the insurance company was vicariously liable for her injuries because the company had contracted the towing company to respond to roadside assistance jobs. The tow company and its driver admitted that they had failed to exercise ordinary care and caused the crash but presumably did not have money to pay an award of that size.

At the time of the collision the tow truck had finished one job for the insurer and was on route to another when it hit the vehicle driven by the claimant, whilst travelling at nearly 45 miles per hour.

This decision is worth noting by all insurers because vicarious liability for the acts of another is inconsistently applied by the courts. Arrangements with independent suppliers such as tow truck operators should make it clear that they are acting as independent contractors and not as agents on behalf of the insurer or intermediary using them, and that the suppliers are making the services available and not acting on the instructions of the insurer or intermediary. Client-facing documents referring to such services should make that clear. Vicarious liability can be imposed on a principal who uses an agent to perform its work. Even the use of phrases like “on behalf of” or “for” can create the impression of agency. Because of tragic cases like this one, where courts are looking for a deep pocket, care has to be taken with the way in which independent contractors are used.

[Reported in Law360 on March 19, 2024]

First published by: Financial Institutions Legal Snapshot