Can my business or I be held liable for the actions of someone else? To put it simply, yes.
Vicarious Liability.
You may not be familiar with this term, but if you are a business owner, you need to do two things:
- Learn the meaning of Vicarious Liability
- Carry adequate Liability Insurance to protect you from it.
What is Vicarious Liability?
The definition of Vicarious Liability is liability imposed on one party because of the actions of someone else. This is also called Imputed Liability.
Vicarious Liability involves special relationships between two parties, most commonly employer/employee. Suppose an employee carrying out his or her job duties negligently causes and accident in which a third party is injured, the employer can be held liable.
A recent example of this is the Walmart/Tracy Morgan case. An accident involving a Walmart truck left Morgan injured and caused the death of entertainer Jimmy Mack. Since the driver of the truck was carrying out work-related duties at the time of the accident, Walmart can be held liable for damages. It’s a given that Walmart has very deep pockets as well as high levels of liability insurance. What about your company? If one of your employees kills or injures someone during the course of their workday, are you covered?
Other examples of Vicarious Liability include:
Partnerships can be held liable for negligence committed by a partner while acting on the partnership’s behalf.
Corporations can be held liable for negligence committed by corporate directors and executive offices during the course of their duties.
Loaning your car to another can expose you to Vicarious Liability if that person causes an accident in which a third party is injured.
General Liability Policies and BOPs
Now is the time to review your General Liability policy. What are the limits of your policy? If your policy covers $1 million in damages, but your business gets sued for $3 million, where do you think the rest of the money is coming from? Can your business survive a financial hit of that magnitude?
Maybe you have a Business Owner’s Policy (BOP) that combines business property coverage with General Liability. Ask your agent about the limits of your policy’s liability, especially if your business carries higher risks of exposure. A Business Umbrella Policy can provide additional Liability protection to take up where your BOP of General Liability coverage leaves off.
Commercial Auto Insurance
Be sure that your business is listed as the named insured on your Commercial Auto Declarations page. Then your business is covered in the event of an accident, whether you, an employee, or other business-related user causes it.
Call Veazey Insurance today and let our experts find just the right policy and coverage for you. Be sure to ask about your General Liability Limits, BOP options, and whether a Business Umbrella is right for you. At Veazey Insurance Agency, we’ve got you covered!