Insureon Blog

What Is Vicarious Liability?

16. August 2013 15:49

For any small-business owner, vicarious liability is a key concept to understand. Why? Because, thanks to vicarious liability, you and your business can be held liable (and therefore financially responsible) for things that you didn't actually do. In other words, even if you play by the rules at all times, you could find yourself in hot water because of work done or mistakes made by your contractors, employees, or agents.

Here's a look at what vicarious liability is and how it can wreak havoc on your business finances.

Vicarious Liability: Taking the Heat for Someone Else's Work

Just as “living vicariously” through someone else involves taking pleasure in another person's exploits, vicarious liability means that you can legally be held responsible for another person's wrongdoing. This is possible because of how certain legal relationships work.

Here's an example: say one of your employees mops up a spill at your café but forgets to put out a “Wet Floor” sign. A customer comes in and slips on the wet patch. If the fall leads to an injury, the customer could sue your business for damages, and your entire business could legally be held liable – and be responsible for paying any lawyer's fees, court costs, settlements, or judgments associated with the suit. So even though your employee's actions led to the incident (and even if you reminded the employee to put up the sign), you and your business could be considered responsible in the eyes of the law.

Luckily, business insurance protects you in cases of vicarious liability: a General Liability policy, for example, would cover you in this example and others involving the injury of a third-party on your property. 

Who Has Vicarious Liability?

As a business owner, you could be vicariously liable for the actions of…

Protect Yourself from the Costs of Vicarious Liability

Vicarious liability is more or less inescapable for business owners. But that doesn't mean your bottom line has to suffer because of mistakes or oversights that other people make. Various types of business insurance specifically protect you from the costs of both direct and vicarious liability – that is, from the costs associated with mistakes  you make and those made by your employees and agents, usually by covering the expense of defending yourself against claims brought by people harmed by those mistakes or oversights.


Want more information about the vicarious liabilities you face and how to protect yourself against them? Fill out our online insurance application or call an insureon agent to chat (800-688-1984).


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