“Negligence” is a term you probably hear quite often, from TV crime dramas to your personal life. Maybe your employees consider you to be negligent if you failed to resupply the coffee machine (and perhaps they’re right!). But when it comes to insurance and the law, negligence has a very specific meaning.

Insurance companies define negligence as the failure to take reasonable action to prevent damage or harm to either a person or property. Whether the perceived negligence was an accident or not, there is always the risk of a lawsuit on the grounds of negligence — even for a cause you consider false or frivolous.

What does negligence mean in insurance terms?

Negligence is an insurance term that is tied to various types of liability insurance, such as home, life, health, business, and auto. For example, perhaps a retail shop owner was negligent by leaving their water hose out after cleaning the sidewalk, causing a passerby to trip. In this case, the store owners’ general liability coverage would respond.

Or, maybe a digital marketing consultant offered careless advice to a client, causing a decline in the client’s revenue. If the client sues the consultant and she’s held liable for negligence, her professional liability insurance would respond.

One important thing to know about negligence is that it doesn’t automatically create grounds for a lawsuit. Rather, the property damages or bodily injury damages that stem from a negligent act are what you can be sued for.

What is a negligence claim?

Even if you’re found guilty of negligence, your insurance policy may still cover a liability claim. That said, whether an act was negligent or not is decided on a case-by-case basis and, when it comes to an insurance claim, the level of negligence and the type of damage directly influence that assessment.

Another important point about negligence is that simply making a negligence claim isn’t enough to warrant an insurance claim. Negligence must be proven.

In order to prove a negligence claim, the law states that the plaintiff (the injured third party, for instance) or insurance company must demonstrate that the defendant (person allegedly at fault) satisfied the four elements of negligence. We’ll define these terms more broadly in the sections below:

  1. Duty
  2. Cause in the fact
  3. Breach
  4. Damages

Duty

In terms of insurance, “duty” refers to the legal obligation between either you and a client or you and your insurance company. For professionals, it has an additional element, which takes into account your duty as a professional to know the laws, safety measures, and best practices within your field.

For instance, let’s say that you’re a programmer who gets hired by a major company to develop a new mobile app. You deliver the code, the app launches, and the CEO is thrilled. But things take a turn a few weeks later when the code is found to be full of errors and users start having major issues with the app, leading to hundreds of negative reviews and a decline in your client’s revenue.

In this case, your client would have grounds to sue you, claiming that your faulty code caused reputational and financial damage to the company. It’s likely that the founder would seek compensation for the financial impact of your alleged negligence as well as funds to hire a PR firm to repair the company’s public image. In this case, it was your duty to provide error-free code as the hired programmer, which you were negligent in doing.

Causation

Causation must be established in order to determine whether or not the defendant’s actions, or lack thereof, were responsible for the plaintiff’s damages. Often, this can be pretty confusing, particularly about who or what caused the damages. In order to make it somewhat easier to navigate, causation is typically split into one of two categories, and both must be satisfied for proof:

  • Actual Cause – Also referred to as “cause in the fact,” this states that if the action had not taken place, the personal injury wouldn’t have occurred. This is determined with a “but for” test (but for the cause, the incident wouldn’t have occurred).
  • Proximate Cause – Sometimes referred to as “legal cause,” this adds an additional requirement. It determines whether the defendant could have reasonably foreseen such an injury taking place due to their actions or lack thereof. So, even if your actions meet the standards for the “but for” cause of an injury, if the consequence of your action was unforeseeable, you may not be held liable according to the standards of “proximate cause.”

For example, perhaps you are a hiking guide taking a group of students to a remote canyon where they can take endless selfies to populate their Instagram pages. You take a shortcut, thinking you’ll save some time, even though it’s a tougher trail compounded by the previous night’s heavy rains. One of the students slips and injures themself, leading to a lawsuit.

Was your decision to take the quicker, more challenging trail an act of negligence on your part? Well, maybe. “But for” your decision to take the trail, the student probably would not have suffered the injury. But whether your action meets the “proximate cause” standard is a bit more complicated. To determine that, the insurance company will likely ask questions, such as whether you were aware that the students had little hiking experience and shoes with poor traction, to determine whether you could have reasonably foreseen that the shorter trail would lead to an injury.

Breach of duty

In order to prove negligence, you can’t simply state that a duty was owed; you must also show that the party accused of negligence breached the duty. In other words, you have to clearly demonstrate that the accused didn’t take all reasonable precautions in order to avoid or mitigate the potential problem. In most cases, the plaintiff has to establish that rash decisions were made or that shortcuts were taken.

In the earlier case of the programmer, a valid argument for breach of duty might be the failure to recognize that the code was faulty when it was delivered. After all, you should have double-checked the code before the app was released.

Damages

The final criteria that must be satisfied are that actual damages, injuries, or harm occurred as a result of your negligence.

In the case of the programmer, the CEO who hired you would have to claim that you were directly responsible for the company’s damages. If the code was not faulty, users should have theoretically had no issues with the app, and therefore would not have left negative reviews, leading to a decline in revenue.

These are the four components of a valid negligence claim but, as you can probably imagine, many claims are brought before a court to eventually be squashed because they don’t meet these standards. Whether or not your actions are actually determined to be negligent, even the accusation of negligence could cost you a lot of money just to defend yourself. That’s where insurance can help.

Don’t be negligent about insurance

Are you covered by liability insurance? If not, you’re taking a massive risk. Just one negligence lawsuit could hamstring your business operations or possibly bankrupt you — even if you’re not proven to be at fault.

No matter the circumstances, it’s always smart to stay protected. This is why it’s essential to have general liability insurance and professional liability insurance, which can shield you from having to pay damages due to negligence and can provide your legal defense in these types of cases.

And with Thimble, you can choose from a policy by the job, month, or year. Click get a quote or download the Thimble mobile app, answer a quick set of questions, receive your quote, and click to purchase — all within minutes, so you can get on with your day.