According to Cornell Law School, negligence is “a failure to behave with the level of care that someone of ordinary prudence would have exercised under the same circumstances.” This applies to both professional services and personal actions.
While you can’t purchase a catch-all “negligence insurance” policy, you can get protection under other liability insurance.
In business, negligence is covered under general liability, professional liability, and commercial auto policies. In personal insurance, negligence is covered under homeowners, condo, renters, auto, and other policies.
Many professions have standards of care that practitioners are expected to follow when delivering services to customers, clients, or patients. When these standards aren’t met, it can be cause for a claim of negligence.
But simply failing to meet a client’s or patient’s expectations or making a mistake doesn’t necessarily mean you’ve been negligent. Several elements must be established to prove what is called a “prima facie” case of negligence:
- The defendant must have a legal duty to the client or patient.
- The defendant must have breached that duty.
- The client or patient must have suffered an injury.
- The defendant’s breach of duty must have caused the injury.
The law also distinguishes between “cause in fact” and “proximate cause” when determining who is responsible for an injury. When a defendant’s actions directly cause an injury, they are said to be a cause in fact. When the actions indirectly cause the injury, they are deemed a proximate cause.
For example, say a home’s roof caves in from the weight of snow and the homeowner gets injured. While the injury was directly caused by the snow and collapsing roof, the proximate cause may be the architect’s failure to design the building properly. It’s important to know how a professional liability policy would cover proximate cause, since companies can be named in lawsuits for direct or proximate cause.
Professional liability insurance, also known as errors and omissions or professional indemnity insurance, is a form of business insurance that helps with lawsuits stemming from negligence, errors, omissions and other mistakes that may financially harm a client or patient. In some fields such as medicine and law, these policies are known as malpractice insurance. They help pay for your legal defense and any settlements or judgments you owe, subject to the limits of the policy.
General liability insurance responds if a company neglects to keep visitors safe on its premises or its employees behave negligently at a client’s office. For example, if a company fails to alert visitors to a wet floor or an employee at a client’s site negligently breaks a window, the general liability policy would step in.
Business auto insurance also covers negligent acts that cause harm, such as missing a red light, veering into another lane while changing a radio station, or rear-ending someone while gazing at a sports car in another lane.
Individuals can also be held liable for negligence that harms others. Failure to enclose a pool, restrict access to alcohol at a party or repair a staircase are all examples of negligence that could lead to an injury lawsuit.
For individual liability claims stemming from negligence, the policyholder could look to their homeowners, renters, condo, boaters, auto, or other personal insurance policies. Insurance policies that cover liability usually help with legal defense and compensation to victims. Note that policies often contain exclusions, especially for “attractive nuisances” such as pools and trampolines, and many insurers won’t cover certain dog breeds.
Types of negligence
Over the years, courts have made several distinctions concerning negligence, and states have established different ways of compensating plaintiffs. These can be broken down into five separate kinds of negligence.
Injuries often aren’t 100% the fault of the defendant. The injured party may be partially responsible as well. In states that use a comparative negligence standard, damage awards are commensurate with the degree of negligence.
For example, suppose Joe was texting while driving and hit Jane’s car. Jane is injured and sues Joe for negligence. But it turns out that Jane was driving over the speed limit at the time of the accident. A jury determines that Joe was 70% responsible for the accident and Jane was 30% responsible. As a result, the compensation Jane receives is reduced from what it would have been if Joe were 100% responsible.
There are a few states that take an all-or-nothing approach to negligence. In these states, the plaintiff cannot collect any damages if a jury determines they contributed in any way to their injury. Thus, in the example above, Jane would not be able to collect any damages as a result of Joe’s hitting her car, because her own negligence contributed to the damage.
Modified comparative negligence
This approach combines aspects of comparative and contributory negligence. In states that have adopted this standard, a plaintiff can be awarded damages if they aren’t more than 50% responsible for the injury.
Ordinarily, negligent acts are considered unintentional. But when a person completely disregards the safety of others or their actions are reckless or willful, they may be guilty of gross negligence. For example, you may be found guilty of gross negligence if you know an elevator door is malfunctioning but you don’t take the elevator out of service and someone is injured. Note that liability insurance specifically excludes any acts that intentionally cause harm or are illegal.
A person can be found vicariously negligent even if they aren’t directly involved in an injury. For example, if a minor child or a pet causes damages, the parent or pet owner could be held liable. Similarly, if an employee gets in a fight and hurts a customer, the employer could be vicariously liable.
Negligence might result in a denial of coverage
While some insurance policies are specifically designed to cover the negligent acts of businesses, professionals, and individuals, other policies, such as property insurance, might not cover losses arising from negligence. This would depend on the degree of the policyholder’s fault and the limits of the policy.
For example, insurers expect building owners and homeowners to take reasonable care of their property, and may deny a property damage claim if the owner has neglected to maintain or repair it. Say a homeowner puts off fixing a leaky pipe and mold damage occurs. The insurer might not cover the mold damage since it could have been prevented if the pipe had been fixed.
Cyber insurers are also becoming sticklers about negligence. Most insist that policyholders demonstrate cybersecurity acumen and won’t cover companies that are lax or negligent about cyber hygiene (at least not affordably).
Since lawsuits can be quite expensive, make sure you are adequately covered and understand your risk of negligence. Your JAISIN insurance professional can help you understand how your coverage will respond and what is excluded. Call or email us today!
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