“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 owner’s 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, you can be sued for the property damages or bodily injury damages that stem from a negligent act.

There are four main types of negligence:

  • Gross negligence
  • Comparative negligence
  • Contributory negligence
  • Vicarious negligence

Let’s break these down in more detail.

Gross negligence

Gross negligence is serious. It refers to acts of negligence that display an extreme disregard for other people’s safety when they’re in your care. If you’re driving a client around while intoxicated, and they get seriously injured as a result, that is considered gross negligence. General liability insurance policies typically do not cover gross negligence.

Comparative negligence

Comparative negligence applies when more than one party contributed to the cause of an accident and the blame is shared between them. It’s common in auto accidents, where multiple people may be at fault, albeit to differing extents. In these cases, insurers will determine how much of the fault should be assigned to each party, and award damages accordingly.

There are three types of comparative negligence. Which one applies to you depends on where you live and your state’s laws.

  • Pure comparative negligence allows a plaintiff to collect some damages even if they are found to be 99% at fault.
  • Modified comparative negligence only allows plaintiffs to collect damages if their fault is below a certain percentage, typically 50% or 51%.
  • Slight/gross negligence is only used in South Dakota. Plaintiffs can only collect damages if their share of fault for the accident is determined to be slight and the defendant’s is gross.1

Most of the United States uses comparative negligence to assign blame in auto accidents. However, a handful of states and the District of Columbia use contributory negligence, which we’ll explain next.

Contributory negligence

Contributory negligence states that if the injured party was negligent at all, they’re not eligible to receive damages. It’s an all-or-nothing scenario, unlike comparative negligence, where the injured party can still collect some damages based on the percentage they are at fault for causing the accident.

Contributory negligence can apply in several types of insurance, including auto insurance and workers’ compensation.

Vicarious negligence

Your business can be held liable even if you weren’t negligent, but someone who works for you was. This is known as vicarious negligence. Vicarious liability applies when someone sues you for perceived or actual negligence by one of your employees or contractors while they were engaged in performing work on your behalf.

While businesses often use independent contractors to reduce their liability, there are some scenarios where vicarious liability can still apply. For example, an injured party could claim you were negligent because you hired a contractor who wasn’t capable of doing the work. In these scenarios, the party bringing the suit could seek damages from both you and the independent contractor.

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 payout. 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. Causation
  3. Breach
  4. Damages


”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 considers 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. The founder would likely 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.


The insurance company must establish causation 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 of the “but for” cause of injury, if the consequences of your action (or inaction) were 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? 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 of care was owed; you must also show that the party accused of negligence breached that 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 poor 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.


The final criteria that must be satisfied are that actual damages, injuries, or harm occurred as a result of the 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 had no substantive issues with the app, and therefore would not have left negative reviews, leading to a decline in revenue and damaged professional reputation.

These are the four components of a valid negligence claim but, as you can probably imagine, many claims are brought before a court only to be thrown out 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 your business reputation. That’s where insurance can help.

Does insurance always cover negligence?

It depends. Like most insurance claims, negligence claims are not one-size-fits-all. Whether you’re covered will depend on the type of negligence and damage. For example, your insurer will usually provide your legal defense, but they may not always pay for the damages if you lose. Also, gross negligence (intentional act or willful disregard) is typically not covered by general liability policies.

To reduce your risk of having to foot the entire bill yourself, take whatever reasonable steps you can to avoid acting in a negligent manner and minimize damages to your customers.

Can negligence cancel your insurance policy?

Unfortunately, yes. depending on the type of negligence and if you were found at fault, your insurer may decide to reassess your insurability. If they feel that you are too risky to insure, or don’t have adequate procedures in place to avoid a repeat negligence claim, they may cancel your policy. This can also happen if you rack up a history of proven negligence, or multiple claims that were easily avoidable. In a worst case scenario, you may have to purchase high-risk insurance and expect higher premiums as a result.

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.


  1. Insuranceopedia. What is Gross Negligence?