Insurance 101
Premise liability insurance 101
Also known as “slip and fall insurance” premise liability involves personal injury on your property. But an injury doesn’t mean you’re liable. We explain the nuances in this guide.
Tort liability 101
What is tort liability? Tort liability protects you & your business from expensive tort claims. Learn how tort liability can protect your business!
- March 30, 2020
Did you know that even if your business doesn’t commit a crime, it can still be sued for wrongdoings? These civil suits over wrongful actions or omissions are legally referred to as torts. And due to vicarious liability, your business can be held responsible for torts committed by your employees, partners, officers, or directors.
Because practically every claim in civil courts (besides contract disputes) falls under tort law and liability, it’s important that you understand the ins and outs of tort liability.
Are you prepared if a tort suit comes your way? You will be when you’re done reading this guide.
What is tort liability?
Torts are strictly tied to claims that are brought to a civil court. It’s an area of English common law that’s meant to right a wrong (violation of common law, social norms, or civil law) without involving criminal punishment. For this reason, the compensation for a tort in most cases comes in the form of financial payback for damages.
To be found in violation of a tort, the victim (called the ‘plaintiff’) must prove that they were harmed by the actions of another party (the ‘defendant’). But it’s not just about harm. The plaintiff must also establish the following:
- They had a right that was legally protected and the defendant had a duty to protect it
- The defendant failed or violated that duty to protect
- The defendant was harmed (resulting in any of the following):
- Loss of future income
- Loss of past income
- Pain and suffering
- Medical expenses
- The harm or injury was a direct result of the defendants’ failure
In some cases, punitive damages may be awarded, which are meant to force the plaintiff to repay the damages and then some (excess of full compensation).
Torts are not crimes
It’s important to highlight that torts are not crimes. Crimes are violations of legal statutes that were put in place by either municipal, state, or federal authorities.
- Torts – Typically impact one or a limited number of people. The matter will usually be resolved with a fine or monetary compensation.
- Crimes – Impact society as a greater whole. Although fines may be levied, crimes also result in loss of civil liberties, prison sentences, etc.
A general liability insurance policy will often be able to cover the damages and legal fees involved with a tort claim. However, this type of small business insurance policy would likely be voided in the case of a crime.
Categories of tort law
Most tort cases will fall into one of a few primary categories:
Intentional torts – This is an intentional action committed by one person or party that caused harm or damage to another. Intentional torts can be split into subcategories, including
- Physical injuries – Some torts, such as battery, can cause physical injuries; whether the injury itself was intentional or accidental doesn’t matter, since it’s the action that preceded the injury.
- Reputational or psychological harm – Other torts, like invasion of privacy or slander, can cause psychological damage.
Workplace torts – Business torts are a subset of intentional torts that are committed by an employer against his or her employees. Examples include:
- Wrongful termination
- Wrongful demotion
- Employment discrimination
For example, a high-profile intentional tort case you might have read about was Hulk Hogan vs. Gawker Magazine. In 2016, Hogan sued the gossip magazine for $130 million for intentionally violating his privacy by leaking a video of him engaged in a private act. They later settled out of court for $31 million.
Strict liability tort – Strict liability torts don’t focus on culpability (in plain English, whose fault it is). A person who is strictly liable is responsible for the consequences resulting from a certain action or practice, even if they’re not at fault or didn’t intend harm.
Put simply, the strict liability definition focuses on the act itself and not the person doing the harm.
For instance, if your business produces a defective product, it could cause harm to your customers. Even if you took reasonable precautions and didn’t intend to harm anyone, the victim could still be hurt.
Negligence tort – A negligent tort (also known as a ‘reasonable standard of care’ tort) pertains to harm done to others because you failed to exercise a certain level of care to prevent the damage.
For example, a school janitor has a duty to set up a wet floor sign after scrubbing the halls. Should they not do that, someone could slip, hurt themselves, and make a negligence claim.
Tort liability insurance
Fortunately for you, your business is able to shield itself from tort claims by purchasing a general liability insurance policy. Whether the tort was based on intentionality, negligence, or strict liability, this type of insurance policy could help cover the following:
- Bodily injury
- Medical bills
- Third-party property damage
- Legal fees
That said, a general liability policy won’t cover everything. For example, for torts claiming financial losses resulting from professional mistakes or advice, you’d need professional liability insurance, also known as errors and omission (E&O) insurance.
Protect your business the right way
Tort liability claims are an inherent risk of running a small business. So, if you want the peace of mind that accompanies being protected, you need the right insurance.
That’s why we’re here.
Thimble is game-changing business insurance that perfectly balances simplicity, affordability, and flexibility. It’s on-demand coverage that you can purchase by the hour, day, or month. And you can do it all from the Thimble mobile app.
Do you want to protect your business from tort liability? With Thimble, it’s fast and easy. To start, download the Thimble app or click “Get a quote.” In less than 60 seconds, you can go from zero insurance to coverage. Simple, affordable, and tailored to you—we do insurance the 21st-century way.
Our editorial content is intended for informational purposes only and is not written by a licensed insurance agent. Terms and conditions for rate and coverage may vary by class of business and state.
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