Tort liability

Righting wrongs: Paying for the damage or loss your business causes.


What is tort liability?

Tort liability is a business’s legal obligation to compensate individuals who have been harmed or lost something because of their actions or negligence. The term “tort” itself refers to a wrongful act that leads to harm to another person.

For example, if a customer becomes seriously ill due to improperly prepared food, the restaurant could be held legally responsible for their medical expenses, pain and suffering.

Types of tort liability

Understanding different types of tort liability is crucial for small business owners to reduce risks and manage potential legal and financial consequences. There are several types of torts, including:

  • Negligence: Involves careless behavior or inaction.
  • Intentional torts: Involves causing damages through deliberate harm.
  • Strict liability: Responsibility is imposed without the need to prove negligence or intentional harm.

For example, a negligence tort might involve an accountant making a mistake in their client’s paperwork, leading them to lose out on significant tax advantages and paying more. While the error was unintentional, the accountant could be found liable and have to compensate for the client’s loss.

Intentional torts happen when someone makes a purposeful action that causes harm. Say you lose your temper, threaten to punch a customer and shove them from your store. These actions could give rise to a civil lawsuit if the customer decides to take you to court.

With strict liability, a business owner could be held liable regardless of intent. Product liability is a strict liability offense, meaning you — a manufacturer or supplier — could be liable if a product is defective, even if you created or sold the product with the best intentions.

4 elements needed to prove tort liability

To establish tort liability, specific elements must be proven, such as:

  • Duty of care: The business was obligated to ensure the victim’s safety or well-being.
  • Breach of duty: The business did not uphold this obligation and failed to act with due care.
  • Direct causation: The victim’s injuries directly resulted from this breach.
  • Actual harm: The victim suffered measurable damages, such as medical costs or loss of income.

If these elements are confirmed, the business is typically required to compensate the victim for medical expenses, lost income, pain and suffering and other damages.

Let NEXT take care of your business

We know your business is unique and has specific needs. That’s why we offer affordable, custom business insurance.

To get your tailored instant quote, simply answer a few questions online. Once you’ve purchased your insurance, you can immediately access your certificate of insurance and share it 24/7 via the NEXT app.

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Business insurance is divided into different policies. We offer seven types so it's easy to design the coverage that fits your business.
General Liability insurance
General Liability
Protect yourself from accidents that cause physical injury or damaged property.
Professional Liability or Error and Omissions Insurance
Professional Liability/E&O
Shield yourself from lawsuits that claim your work errors caused financial losses.
Workers' Compensation Insurance
Workers’ Compensation
Cover medical bills and lost wages if your employees have an accident at work.
Commercial Auto Insurance
Commercial Auto
Stay on the road with coverage for dents, tows and damage to someone else’s vehicle.
Tools & Equipment Insurance
Tools & Equipment
Upgrade your general liability coverage to protect any gear that’s stolen, damaged or lost.
Commercial Property Insurance
Commercial Property
Keep your building, inventory and equipment protected from fire or water damage.
Business Owner’s Policy Insurance
Business Owner’s Policy
Combine general liability and commercial property into one policy to protect your business.
* To the extent permitted by law, applicants are individually underwritten, not all applicants may qualify. Individual rates and savings vary and are subject to change. Discounts and savings are available where state laws and regulations allow, and may vary by state. Certain discounts apply to specific coverages only.
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Issuance of coverage is subject to underwriting. Not available in all states. Please see the policy for full terms, conditions and exclusions. Coverage examples are for illustrative purposes only. Your policy documents govern, terms and exclusions apply. Coverage is dependent on actual facts and circumstances giving rise to a claim. Next Insurance, Inc. and/or its affiliates is an insurance agency licensed to sell certain insurance products and may receive compensation from insurance companies for such sales. Policy obligations are the sole responsibility of the issuing insurance company. Refer to Legal Notices section for additional information.