Negligence And Insurance
What Does Negligence Mean In Insurance?. One definition of tort is that of a wrong committed by one person against another for which the law provides a civil remedy in the form of damages.
Some easily visualized examples of torts are: assault and battery, trespass, conversion, defamation, and malicious destruction of property. These are all considered intentional torts.
The most common form of a tort is the one committed unintentionally. It is a wrong that is committed because of negligence not intent.
What does negligence mean in insurance? Several statutes define negligence through wrongful death statutes, the Jones Act, dramshop liability statutes, and more, but most of the law of negligence is defined more based on common law rather than statutory.
The definition is based on the reported opinions of courts that have decided similar points in the past rather than definitions rendered through legislative enactment.
It is a firmly established rule of the common law that every person's conduct is to be such as to avoid injury to the person or the property of another.
This article will review some of the basic elements that impinge on the question of negligence as it relates to liability in insurance.
Because the laws in this area are subject to change and in many instances flow out of judicial findings, the status of some of these issues will be changed over the years through both judicial and legislative actions.
So to be sure you have the most current information, please check the current status of these doctrines your own state, or states your business operations in.
What does negligence mean in insurance? Learn about this important business insurance principal, and how someone is found finically responsible when someone or something was injured or damaged.
Below are some answers to commonly asked insurance negligence questions:
- What Is The Definition Of Negligence In Insurance
- What Is Meant By Degree Of Care Regarding Negligence?
- What Is An Attractive Nuisance?
- What Is Contributory Negligence?
- What Is Comparative Negligence?
- What Is The Difference Between Comparative Negligence & Contributory Negligence?
- What Does 'Res Ipsa Loquitor' Mean Regarding Negligence?
- What Is The difference Between Strict And Absolute Liability?
- What Is A Negligent Tort?
- What Is An Employer's Liability For Negligent Employee Acts?
- What Is Vicarious Liability?
What Is The Definition Of Negligence In Insurance?
Negligence definitions may vary by case law but are generally defined by such terms as the "failure to exercise care," or "failure to do what a reasonable person would have done under the circumstances" or "doing something which a reasonable person would not have done under the circumstances."
Of course these definitions require even further definition in order to determine the type of care that should have been exercised and what exactly would a reasonable person do in the particular circumstances.
In a tort liability situation, even though a person has committed negligence or acted negligently so as to cause an injury to the person or property of another, that person will not be held liable for the damages of the latter unless that negligence was the proximate cause of the damages.
This means that it is not sufficient merely to show that an injury was caused by the actions of a second party. The mere fact that there was an accident does not in itself establish a presumption of negligence.
What does negligence mean in insurance? In almost every instance, the person claiming damages must prove the negligence of the other, and that the proven negligence was the direct or proximate cause of the injury or the damages.
This means that the question of whether or not there was negligence is often the question of fact that must be resolved by a court.
What Is Meant By Degree Of Care Regarding Negligence?
The duty owed depends on the particular circumstances of the case. Thus, a person owes a greater degree of care to someone who has been invited to a premises (an invitee) than to a trespasser.
Some states distinguish between the degree of care owed to business guests or invitees and that owed to social guests to whom a lesser degree is required. If the person's premises is readily accessible to children, there may be a requirement for greater care to them than to adults.
Courts in some jurisdictions are rejecting the distinctions among invitees, licensees and trespassers and are substituting foreseeability and reasonable care as a basis for determining liability. The degree of care required depends on the nature of the activities conducted by the individual or firm, and the type of product being handled.
A higher degree of care is expected from one who keeps a lion on premises than from another who has a house cat. Similarly, a person who manufactures a motorcycle is expected to take more precautions to prevent its causing injury than the person who manufactures office supplies.
The degree of care expected in each instance is commensurate with the risk involved.
What Is An Attractive Nuisance?
As was mentioned above, a person whose premises is readily accessible to children will be expected to take great care to avoid injury to the children.
If there is something on the premises that will draw a child to investigate or use it, the owner of the property may be liable for the injuries sustained by the child, even though the item was entirely within the premises and the child trespassed on the property.
The attractiveness of the object, if above ordinary, is held to be an implied invitation to the child to enter the premises and raises the status of the child above that of a trespasser.
Swimming pools, wells, shafts, caves, construction sites and similar attractions, which have a strong attraction for children, have been held to be "attractive nuisances" or "attractive hazards," and the owner is charged with a responsibility to keep children from coming to harm through such "attractions."
At what age does a child become a trespasser? Some states differentiate by age and each of those states sets its own limitation. Sixteen is one cutoff date, but other states use 14 or even 12. Some states use the term "tender years" and allow the courts and juries to decide if the particular child remained in those "tender years."
Children under seven may never be considered trespassers because they are not capable of comprehending the danger while those between the ages of eight to fourteen may be held to a higher standard of comprehension but still remain under the attractive nuisance statutes.
What Is Contributory Negligence?
In some states, even though a person can show that the negligence of another caused damages, that other party may still not be liable for the damages.
In those states, a person who is claiming damages due to another's acts must not have contributed to the accident in any way. The injured party must be free of contributory negligence.
Last Clear Chance - On the other hand, even where the injured party was guilty of contributory negligence, the defendant may still be liable, if he or she had a "last clear chance" to avoid the accident and chose not to exercise that chance.
Such "last clear chance" may be held to override the plaintiff's contributory negligence.
It is important to note that contributory negligence rules are no longer followed in most states, having been replaced by the comparative negligence rules.
What Is Comparative Negligence?
Almost all of the states have enacted legislation or follow judicial interpretation that modifies and abolishes the strict requirement that a plaintiff be free of contributory negligence in order to recover damages.
There are three types of comparative negligence systems in use now: "pure" comparative negligence, "modified" comparative negligence, and "slight vs. gross" comparative negligence.
The "pure" form allows the claimant to recover reduced damages up to the point where it can be said that his or her own conduct was the sole cause of his or her damage.
This means that even if the defendant is only 1% at fault and the plaintiff is 99% at fault, the defendant can be made to pay the 1% of damages.
Because the pure method seems as burdensome to a defendant as the contributory negligence is burdensome to the plaintiff, appropriate modifications were introduced.
The point at which the plaintiff is barred from any recovery differentiates the modifications. The first is called the "not as great as" or "49% system." It allows the claimant to recover damages, reduced by the percentage of the claimant's causal negligence, as long as his or her contribution to the total negligent conduct causing his or her injury is "less than" or "not as great as" that of the party from which recovery is sought.
When the claimant's negligence is deemed to be equal to or greater than that of the defendant, the claimant is completely barred from any recovery.
Another "modified" rule has been designated the "not greater than" or "50% system." It allows the claimant to recover reduced damages as long as his or her comparative contribution to the total negligence is not greater than that of the party from whom recovery is sought.
When the claimant's comparative fault is greater than that of the other party, contributory fault of the claimant bars his or her recovery.
Under the "slight vs. gross" system of comparative negligence, the claimant may recover reduced damages only when he or she is deemed to be guilty of slight negligence in comparison with the gross negligence of the defendant.
What Is The Difference Between Comparative Negligence & Contributory Negligence?
The Main difference between comparative vs contributory negligence is that comparative negligence seeks to compensate the injured party at least for some part of his or her damages or injuries, while contributory negligence is a total bar to any damage award to the plaintiff. For example:
John may be at fault but Sarah is also. In a contributory negligence state, Sarah has no case because she directly contributed to the injury by not looking before reaching for the bill.
In a comparative negligence state, a determination must be made as to how much each person contributed to the accident.
In a "pure" comparative state, if Sarah is 50% negligent, she can collect 50% of her damages.
In a "not greater than" or "not as great as" state, if Sarah and John are equally at fault, there is no case for either side.
In the slight vs. gross negligence state, Sarah also would have no case because negligence was equal.
What Does 'Res Ipsa Loquitor' Mean Regarding Negligence?
Although the general rule is that the plaintiff must prove the negligence of the defendant, the occurrence of an accident under certain conditions is deemed to be prima facie evidence of negligence. This is known as the doctrine of res ipsa loquitor - the thing speaks for itself.
Generally, this rule will apply when what caused the accident was under the control of the defendant and the accident was clearly of a kind that does not occur when proper care is exercised.
The doctrine of res ipsa loquitor is not invoked except when necessary evidence is absent or not readily available. Thus, after a train is derailed, it may not be possible to determine the cause of the accident. The injured parties are not burdened with proving the negligence of the railroad.
The doctrine has the effect of justifying an inference of negligence or, in some jurisdictions, of establishing a presumption of this nature. For Example:
Sarah believes she has a clear case of res ipsa loquitor. She is injured and John is the one who caused it. The facts speak for themselves, so why argue about negligence?
John argues that the facts are not as obvious as Sarah makes them appear. She didn't see him and he didn't see her.
The cause of the accident is the $100 bill and the greed of John and Sarah.
This is not a case of res ipsa loquitor.
What Is The difference Between Strict And Absolute Liability?
There are some circumstances where normal standards of innocence are not considered applicable. Instead, the object or person that caused the injury is considered to be at fault unless it can be proven that the injured person acted in such a gross and negligent way as to bring the injury onto himself or herself.
The burden of proof moves away from the plaintiff and rests on the defendant. In most states if an individual keeps exotic animals on premises, there is strict liability for any injury inflicted by the animal-even if the injury was to a person trespassing on the property.
This standard is also used in most product liability suits because of Uniform Commercial Article 2 which has been adopted in most states.
If a person is injured when using a product, the product is viewed as defective unless the manufacturer can prove that the product was used in a way that was irresponsible. This explains most of the warnings on products. For Example:
Sarah is sure this is a case of strict liability. She is the innocent party and John is the one who injured her. Aren't her injuries enough to force John to take responsibility?
John was not doing anything inherently dangerous or operating in a realm of defined higher responsibility. He was merely walking down the street.
He did nothing to consider his actions subject to a strict liability determination.
Because Sarah cannot establish negligence by John, she has no tort action.
What Is A Negligent Tort?
A tort is a violation of another's natural right. As was discussed earlier, most torts are committed unintentionally, as in the case of negligence that causes injury or damage. Examples of negligent torts would be the failure to keep a sidewalk in repair, negligence in the operation of a motor vehicle, malpractice by a physician, improper and unsafe maintenance of premises.
When a person has been injured or has suffered loss due to the negligent tort of another, the law recognizes the right of the injured party to redress. One definition of redress is the right of receiving compensation or money damages.
Liability insurance concerns itself with negligent torts. As will be shown in other articles, this form of insurance is designed to protect a firm or an individual from claims that may be brought against him or her for negligent torts.
It is, therefore, important for the insurance practitioner to have an understanding of the nature and extent of liability between persons, the restrictions and time limits on suits, and the liability of a person for the actions of others. Some of the more important statutes and practices on these matters appear below under several headings.
It should be stressed, however, that these are presented in barest outline. Therefore, the reader is urged to check further into the laws of his or her state on any point made.
What Is An Employer's Liability For Negligent Employee Acts?
All employers are obligated to protect the public from the wrongful acts of their employees. The courts hold an employer liable for the torts committed by employees if the actions occur in the course of their employment.
At law, a Servant is anyone who, for a lawful consideration, undertakes to perform a lawful pursuit at the Master's direction. Among the tests used in determining whether a Master-Servant relationship exists are:
- The power to hire and discharge
- The power to control the conditions of employment
In contrast, when the work is being done by one engaged for a fixed sum without reference to the hours or conditions of employment, and the principal exercises no direct control over the work, or the employment practices of the one engaged to render the service, courts usually rule that no employer-employee relationship exists.
It should be understood, however, that the question is often debated. The increased use of contract labor, outsourcing and other non-employee relationships has increased the difficulty in determining how to apply this statute.
A Master is not liable for the torts of the Servant except when they are committed within the scope of the employment. Thus, if a porter pushing a hand truck down the street runs into a pedestrian, the employer will be liable for the injury because it arose in the course of the porter's employment.
However, if the porter left his truck to go across the street and got involved in a fight, the injuries he might cause would not be within the scope of his employment and his employer would not be liable.
In many cases, the question becomes a close one. Thus, if a person was hired to keep order during a sale, and this employee became involved in a fight with an obstreperous customer, the question might be decided either way, depending on the individual circumstances of the case.
When, in the course of employment, an employee commits a tort, both the employee and the employee's employer may be sued. The plaintiff may satisfy his or her judgment against one or both. The employer may in turn sue the employee for indemnity against the liability to the third party from the employee's tort.
The points made above relate only to the question of an employer's liability for torts committed by employees. When the employee is injured in the course of employment, the liability of the employer to the employee is determined according to special workers compensation statutes. For example:
Sarah has a new direction for the lawsuit for her injuries. John was driving a company-owned car to the wedding of two of his clients. She decides to sue John's employer.
Her rationale is that John was not going to a social function but instead was attending a business function and, therefore, was acting on behalf of the employer.
What Is Vicarious Liability?
As was mentioned earlier, a person is generally not held liable for the torts of another. A broad exception is made for employers whose employees commit a tort in the course of their employment.
In addition to the liability of employers for the torts of their employees, most states provide by statute that a person may be liable for damages caused by another's negligence in operating that person's motor vehicle.
In some states, the rules have been extended to another's negligence in operating that person's aircraft and boats as well as automobiles.
The laws of the many states make parents vicariously liable for negligent actions of a minor. In some states, minors who apply for a driver's license must have their application signed by a parent with the parent agreeing to accept liability for the negligent torts of the minor.
State statutes also impose liability on the parents of a minor for the intentional, willful or malicious damage to property done by that minor.
Most state statutes broadly assign the owner of a motor vehicle liability for damages caused by the negligence of anyone operating the vehicle but only if the vehicle is being used with either implied or expressed permission.
What Does Negligence Mean In Insurance? - The Bottom Line
So what does negligence mean in insurance? Negligence is the legal way of saying that you messed up. If you found negligent you could be on the hook for a large payout. Speak to an experienced agent to help you cover the negligence risks your business faces on a daily basis.
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Get useful tips and information about how much commercial insurance costs, small business risks and exposures, how insurance regulations effect your businesses' and detailed descriptions of coverages and exclusions and more. Most small businesses need to buy the following four types of insurance at a minimum to cover their operations from every day risks:
Property Insurance: This policy covers a business if the property used in the business is damaged or stolen as the result of common perils like fire or theft. Commercial property insurance covers the buildings, structures and also business personal property - which includes furniture, inventory, raw materials, machinery, computers and other items.
Liability Insurance: Any company can be sued. Slip-and fall lawsuits are very common and be costly. Customers can claim you injured them or damaged their property - and lawsuits are very expensive. Commercial liability insurance pays damages and can include attorney's fees and other legal expenses. It also ca pay for the medical bills of injured third parties
Commercial Auto Insurance: For vehicles owned by the business. Commercial auto insurance pays bodily injury or property damage costs for which the business is found liable - up the the policy limits for liability and property damage.
Workers Compensation Insurance: In almost every state employers must provide workers comp when there are W2 employees. Workers compensation pays for the medical care of employees and can replace a portion of lost wages - regardless of who was at fault for the injuries.