What is vicarious liability?
Well, it is a legal term that for situations when you or your business
becomes liable for the actions of another person or business simply because of
a special relationship that you have with this other party. Here’s an example; suppose your grading company is behind on a
deadline and one of your backhoe operators is out sick. You hire a temporary worker to work on your
job site and you don’t know take the care to discover that he has a drinking
problem. The temp gets drunk on the job and injures
another worker with the back hoe. Now you can be held responsible for the
injuries.
There a lot of different ways that vicarious liability can harm
your business and it’s important that you brainstorm these exposures and
scenarios to learn how you can avoid these losses and how you can tailor your
business insurance policies to protect your company.
One place to start is to understand that the interactions your
own employees and managers with each other carries risk for your company. If you have a manager, or an employee who is
harassing another employee with sexual remarks, then you and your company could
face lawsuits for sexual harassment. The
insurance policy that can protect you from this type of loss is called Employment
Practices Liability Insurance or EPLI for short. Not many NC businesses understand this coverage
and even fewer have bought an EPLI Insurance policy.
Vehicles that you don’t actually own also present another
common form of vicarious liability risk.
Let’s say you send your
receptionist out to pick up the company
mail at the post office each day.
This presents a vicarious liability risk for you since she is now
running a company errand, even though she is using her own car. Now if she runs a red light and injures
several people, her auto insurance policy may not have high enough limits to
pay this claim. If that happens, then
your company is probably next in line to pay for the injuries and damages. You can protect yourself from this type of
vicarious liability by adding non owned
auto liability coverage to your business
auto policy or to your businessowners
insurance policy.
Companies who handle personal identity information for
clients have special risks. If this
describes your business, then you must carefully vet those employees who handle
personal identity information as well as those who might be able steal this
information. If you hire a temporary
worker during a busy time or a holiday season, then your vicarious liability
risks will increase during that time.
You should take steps to protect your company like performing background
checks on the temporary worker before they begin work for you.
Vicarious liability is a legal reality that handcuffs you to
others with whom you have special business relationships. And your relationship won’t feel so special when
you are being dragged into court because of that person or that firm’s
actions. You need to do your homework on
the front end to protect yourself from this exposure. Learn all that you can about a person or
company who may bring vicarious liability into your orbit. Also take some time and run through the risk
scenarios with your insurance agent to make sure that you have the protection
that you need and want from your insurance policies.
Clinard Insurance Group is an independent agency serving
families and businesses all across North Carolina. It is our mission to help all insurance
consumers to be informed buyers. If we
can help you with your insurance and protection needs for your family or your
business, please call us, toll free, at 877-687-7557 or visit us on the web at www.ClinardInsurance.com.
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