What Is Vicarious Liability Insurance?

What Is Vicarious Liability?

A legal principle is known as “vicarious liability,” sometimes known as “imputed liability,” makes an individual or business accountable for the deeds of third parties or their workers. Usually, it refers to those in charge of those who hurt their victims.

For instance, a business (referred to as the principle) has influence over its workers. So, if an employee (referred to as the agent) causes harm to a person while performing their work duties, vicarious liability laws may be applicable to hold the corporation liable.

Victims have more possible defendants in a personal injury case thanks to vicarious liability. In many cases, plaintiffs will file a claim against the party who injured them directly as well as others who are vicariously liable for the losses that transpired.

Strict liability versus vicarious liability

Due to the fact that vicarious liability differs from a usual personal injury claim, it is crucial to comprehend how it operates. A plaintiff in a typical tort case must establish certain elements in order to be granted damages. Plaintiffs need to show:

  • The accused bore an obligation of care (to act reasonably)
  • That obligation was broken by the defendant(s) (usually by acting negligently or failing to exercise the care a reasonably prudent individual would have exhibited in the same situation)
  • The harm was caused directly or indirectly by the breach of duty.
  • The plaintiff should receive compensation because they sustained damages.
  • Plaintiffs do not necessarily need to demonstrate fault, though. The use of the strict responsibility theory is one exception. Regardless of whether the defendants were careless or malicious, strict liability requires that they be held responsible for damages. No matter what the circumstances, they are accountable for their actions if they cause them.
  • For instance, speeding is an instance of strict liability. If a driver exceeds the speed limit while operating a vehicle, they are accountable for doing so even if they didn’t plan to or were aware that they were doing so.

Strict liability includes vicarious culpability. Under this legal theory, defendants may be held responsible for losses even though they were not negligent. The restaurant is responsible for the server’s behavior, for instance, if they burn you after dropping a hot pot of coffee on you. Even if the restaurant did nothing negligent, it is the principal in control of the server (the agent) and is accountable for their actions while on the job.

What Does Vicarious Liability Insurance Serve?

Vicarious liability insurance shields you and your company from claims brought against you as a result of errors made by your staff, independent contractors you’ve recruited, or agents working on your behalf. Several different insurance products can aid in defraying the cost of your defense against a vicarious liability claim.

What Kinds of Situations Involve Vicarious Liability?

As a small business owner, you are held accountable for the conduct of your employees when they are on the job, whether they are working on-site or off. Following are a few examples of vicarious liability situations:

  • discrimination or harassment
  • Personal harm
  • damage to property
  • Libel or slander Infringement on others’ rights
  • Bullying

For instance, if staff members behaved irresponsibly by improperly using the equipment, the car wash company may be held vicariously accountable for damage to a customer’s vehicle.

Owners of businesses may also be held accountable for the conduct of their staff off the job. A formal harassment or discrimination complaint may be filed against your small business if a worker wearing company apparel publicly defames someone.

When Does a Company Have Vicariously Liability?

Small business owners may be held vicariously liable for the careless or damaging acts of their staff. And while mistakes do happen, even a little lawsuit can harm your company’s finances and reputation. As your circle of duty expands as a result of hiring a contractor, your risk of vicarious liability may also rise. The proper insurance coverage might assist in defending your company against vicarious liability claims.

When could your company be responsible in your place of business?

The conduct of your partners, employees, directors, officers, volunteers and other agents may subject your company to vicarious liability. This holds true even if the employee has left the company by the time a lawsuit is filed.

You may be responsible for your workers’ wrongful activities, whether they are intentional (such as hiring-related discrimination, harassment, or theft) or unintentional (such as a data error that costs a client money or a piece of equipment that a customer runs over and gets hurt).


When installing new wiring, one of the electricians working for your electrical contracting company makes a mistake that results in a short and a fire. For the harm that the fire creates, your business can be held accountable.

Despite the fact that businesses are normally not responsible for the conduct of independent contractors, there are specific circumstances in which you can be held vicariously liable for your work. You may be held liable for any damages to third parties if you hire a contractor to complete work that they are not certified to complete, that you are legally compelled to complete, or that is thought to be intrinsically dangerous to others.

Additionally, the definition of a contractor may be ambiguous. It might be argued legally that a contractor is functioning as your employee if they work under your supervision and you set their work hours and other conditions of employment, which would limit your blame for their actions.

How is vicarious liability determined?

Typically, if someone working for your company causes injury to another person or business through their conduct, your firm may be held accountable. This idea is frequently relevant when workers commit errors or unintentional omissions, but intentional acts may also result in vicarious liability if they occur while performing their obligations. You could still be held accountable for the activities of your employees even if they disobey your instructions or disregard safety protocols because it is your duty as a business to make sure that workers act safely and in accordance with the law.


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