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How Do I Protect Against Personal Injury Liability?

If you have been deemed “legally liable” for another person’s injury, the court is ordering you to pay a certain amount to compensate that person for the harm. The cost can be steep, leaving you with a lot of stress and questions. Will you have to pay that out of pocket? Will your insurance cover it? How can you protect your business to ensure one bad lawsuit doesn’t leave you bankrupt? Here are the answers to those questions and more of what you need to know if you find yourself in this situation.

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What is legal liability?

Legal liability is what you are obligated to pay another person as a result of your actions, or an employee’s actions. This occurs when the injured party names you in a civil lawsuit and the court deems you are at fault. Most commonly, you are required to pay hospital fees, lost wages, and any other financial deficits the injured party incurred due to their injury.

What type of injuries can create a legal liability?

You can be legally liable for virtually any kind of injury that can be linked to your actions or oversight, whether intentional or not. Most commonly, you are liable if someone is injured in a car accident you caused. Another common form of legal liability occurs when someone is injured on your property, this is called premises liability.

The qualifications for premises liability vary from state to state, but you can generally expect to have some liability if an employee or customer is injured on your property. In some instances, you can also be held liable for trespassers’ injuries—including if they are injured by a condition you didn’t (but should have) known existed. One example of this is a large hole in your yard that you should have known about, but didn’t because you failed to adequately take care of your yard. If someone walks in your yard and breaks their ankle stepping on the whole, you could be held liable.

Another form of legal liability you could be responsible for are injuries caused by your employees. You may think that that everyone is held accountable for their own actions, but that isn’t always the case in the eyes of the law. If your employee injures someone—intentionally or accidentally—while performing their job, you could be held legally liable. For example, if your employee accidentally drops a hammer on a passerby’s foot, you could be held legally liable for their broken toe. Similarly, if your employee gets mad at the person walking by for making a derogatory comment and punches them, you may still be held legally liable. 

Because there are so many ways you can be legally liable for an injury, it is critically important to purchase an insurance plan that covers you from this risk.

How much would I be liable for?

Each state handles personal injury cases differently, but you can anticipate at least paying for medical expenses if you are found to be legally liable. The law recognizes two forms of damages: compensatory damages and punitive damages. Compensatory damages are meant to make the injured party whole, while punitive damages are meant to punish. Compensatory damages include every out-of-pocket expense the suing party incurred as a result of their injury: medical expenses, lost wages from missing work, and any costs they took on as a result of the injury. Punitive damages are only imposed when the court believes an egregious wrongdoing occurred and the perpetrator deserves to be punished. They are often much larger in cost than compensatory damages.

How do I protect myself from personal injury liability?

The law advises that you follow risk management best practices, such as posting signs on your property warning of every possible danger, getting employee signatures on waivers for any dangerous work activities, and performing strict background checks on all employees.

While these are also steps we recommend, the best form of protection is a solid insurance policy. Insurance will typically cover compensatory damages (the out-of-pocket expenses of the injured party) if you are deemed legally liable. In some instances, insurance may even cover punitive damages. (Some states prevent insurance companies from paying punitive damages, as they are designed to punish a person’s egregious act of wrongdoing that resulted in an injury.)

What insurance policies do I need to protect my business?

First and foremost, every business needs a general liability policy. This protects you from costs related to property damage and bodily injury that you or your employees inflict on another individual due to negligence. If your company engages in particularly risky activities, such as construction projects, you may want to also consider an umbrella or additional policy to cover any extra risks.

How do I ensure my business is adequately covered?

You can click here to meet with one of our experts. We will help you determine your business’s exposure to personal injury liability and how to best protect yourself.

Austin Landes, CIC

About The Author: Austin Landes, CIC

Austin is an experienced Commercial Risk Advisor specializing in property & casualty risk management for religious institutions, real estate, construction, and manufacturing.

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