Glossary of Business Insurance Terms
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A tort is a wrongful act that harms a third party, either an individual or a business.

What is a tort?

A tort is a wrongful action or omission that harms a person or business, prompting the injured party to seek compensation in civil court. As a result of committing a tort, the guilty person (the defendant or tortfeasor) bears legal liability.

How is a tort different from a crime?

A tort is a violation of common law, civil law, or social norms that lead to another party’s personal or financial loss. A crime, on the other hand, is a violation of municipal, state, or federal criminal statutes.

Another way to view the difference between tort and crime: A tort wrongs one individual or business, whereas a crime does harm to society as a whole. The remedy for a tort is commonly the payment of monetary damages, whereas the remedy for a crime can be a fine or a prison sentence.

General liability insurance can provide coverage for monetary damages if you lose a tort case in court.

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What are the main types of business torts?

There are many different kinds of business torts. Some common ones include:

  • Property torts: You damage someone else’s property.
  • Liability torts: Your product or service hurts someone.
  • Dignitary torts: Something you do or say harms a third party’s reputation.
  • Infringement torts: You mistakenly or deliberately use another firm’s trademark or intellectual property.
  • Negligence: In the course of delivering a service, you fail to meet professional standards, thereby harming your customer.

Learn more about torts that can lead to business lawsuits.

What are the legal remedies for torts?

If a third party – either a person or another business – hurts your company, consult an attorney immediately to get advice on how to best seek compensation. If you win the case, a judge will order the defendant to pay you damages.

Going to court is also an option if you want to put a stop to ongoing wrongful acts. A judge will do this by issuing a restraining order or injunction.

What if you or your company is accused of committing a tort?

If you or your company harmed a third party, who is now suing you for damages, consult with an attorney immediately.

Also notify your insurance company of the incident if you have general liability insurance, errors and omissions insurance (E&O), or any other liability insurance that might help cover costs.

General liability insurance or a business owner's policy (BOP) – two of the most useful forms of small business insurance – protect against the most common claims in the event a court holds you legally liable for someone else’s personal, property, or financial loss. Both policies can cover your legal costs (attorney’s fees, court costs, expert witnesses) and any damages a judge orders you to pay the plaintiff.

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Insureon helps small business owners compare commercial insurance quotes with one easy online application. Start an application today to protect your business against legal liabilities.

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Updated: April 29, 2022
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