There is a logical distinction between negligent entrustment, which may apply to any person entrusting a potentially dangerous instrumentality to a third person, and the duty of parents to control and supervise their children. A parent is under a duty to exercise reasonable care so to control his minor child as to prevent it from intentionally harming others or from so conducting itself as to create an unreasonable risk of bodily harm to them, if the parent (a) knows or has reason to know that he has the ability to control his child, and (b) knows or should know of the necessity and opportunity for exercising such control. There is overlap between the two rules, but they are not mutually exclusive. Negligent entrustment is a well-recognized and logically based cause of action.
The insurance policy extended general liability insurance coverage to the insureds and their 10-year-old son. A truck hit a minibike that the son was driving, killing the boy and severely injuring his six-year-old passenger. The accident occurred on a county road near the entrance to the insureds' neighbor's driveway when the bike drove in front of the truck. The insureds requested the insurer to investigate the accident and provide a defense under the homeowner policy in the event that the passenger filed an action. The insurer denied any obligation. The insureds claimed that the recreational vehicle exclusion did not apply and that the insurer had a duty to defend; the insurer contended the opposite.
Did the insurer have the duty under the policy to defend the insured against a negligent entrustment suit?
The court agreed with the district court, which drew a distinction between tort liability arising out of the negligent use of the minibike and the liability of the insureds for the negligent act of entrusting their 10-year-old son with the minibike. The court held that Colorado would have recognized negligent entrustment as an actionable tort if the passenger were to have filed an action. Thus, the insurer was obligated to defend that type of lawsuit.