As a business owner or manager, thoughts of liability claims and risk reduction can keep you up at night. Understandably so, but there are a lot of defenses that you may actually have against liability claims. Now, remember we’re not attorneys we’re not giving you legal advice, and although we are, an insurance agency, we’re not giving you insurance claims advice. This is just general information that you might want to know when placing coverage and operating your business.
First of all, when it comes to defenses against negligence claims, you can argue that the plaintiff, meaning the person that would be claiming against you, has some responsibilities to avoid that loss. One of them is called the last clear chance, that’s the final opportunity to avoid loss or damage. If the plaintiff fails to act or caused the damage to themselves and it’s not a breach of your duty or your image or mission, then that might be a defense against it. Some states allow this and some don’t and of course, an attorney would do this but make sure that if you’re involved in a potential activity or occurrence that could cause a claim that you’re looking for that plaintiff having the last clear chance that’s a phrase that’s often used in the legal industry.
Also, there’s a theory called contributory negligence. It was a defense that used to be used a lot, but now it’s been replaced with comparative negligence, a few jurisdictions still recognize this defense under contributory negligence. If the plaintiff is found to have in any way contributed to the loss that they incurred or damages, no damages can be awarded to them. Comparative negligence, on the other hand, weighs the proportionate amounts of negligence contributed by all the parties. So how much did the plaintiff contribute? How much did you contribute? So if the plaintiff is found to have contributed to the damage, the damage is not dismissed but it may be reduced by the amount that they contributed to their own loss or their own damage.
In some cases, a defense is the assumption of risk. A defendant has to prove that the plaintiff understood the risks involved. For example, if they’re in a risky industry or risky activity like, you know skiing or skydiving, sometimes a plaintiff is said to have assumed the risk and not held somebody else liable because they were harmed. And again that’s a legal determination and usually good terms of conditions or waivers include that. However, on the other side, you may actually be a business that has liability without negligence. There are forms of liability recognized by courts without the necessity for the plaintiff to establish negligence. For example, a court may award damages based on strict liability. That is an example where a business is doing something hazardous, to begin with. For example, handling dangerous materials, if you’re a company that transports dynamite, you may have absolute liability if anything goes wrong if you knew what you’re doing was dangerous. Strict liability comes usually from a product defect. It’s a term first used back in the 1960s. And it is something where you may have liability for materials or products or goods that you produce and if a product defect causes damage or injury that can establish liability without the fact that there was any negligence just the way the product was produced. And then you have imputed or vicarious liability. That’s where another party is held responsible for the negligent party’s actions. For example, an employer usually is held liable for the actions of their employees under vicarious liability.
So if you’re a business and you’re looking at what your potential hazards or risks are, these are the types of perils you want to consider and make sure that your general liability or E&O policy whatever you’re putting in place is considering those if you want them to be covered. Make sure you work with your agent or broker to get the right kind of coverage for your business, including the potential for different types of risks, and mitigate those and reduce them ahead of time but have good coverage in case something goes wrong.