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What Is Vicarious Liability?
Vicarious liability is a legal doctrine that holds a business owner or other party responsible for the actions of another person, such as an employee, agent or contractor, even if the business owner was not directly involved. This often applies when an employee or agent causes harm or negligence while acting within the scope of their work responsibilities.
For small business owners, this means you could be held financially liable for damages resulting from the actions of your employees, agents or independent contractors.
How Can Insurance Help With Vicarious Liability?
Vicarious liability insurance can help protect your business from the costs of defending yourself against lawsuits related to mistakes made by your employees. Several types of business insurance policies may help cover legal expenses, settlements or judgments resulting from a vicarious liability claim.
What Are Some Examples of Vicarious Liability?
As a small business owner, you are legally liable for the actions of your employees while at work, whether onsite or offsite. Some types of vicarious liability scenarios include:
- Harassment or discrimination
- Personal injuries
- Property damage
- Slander or libel
- Copyright infringement
- Bullying
For example, a car wash business could be held vicariously liable for property damage to a customer’s vehicle if the employees acted carelessly by incorrectly operating the machinery.
Business owners can also be held responsible for the actions of employees outside of the workplace. If a worker wearing your company shirt publicly slanders someone, a formal harassment or discrimination complaint could be raised against your small business.
When Is a Business Vicariously Liable?
Small business owners can face vicarious liability anytime their employees’ actions are deemed negligent or harmful. And while mistakes happen, even a small lawsuit can cause significant financial and reputational damage to your business. Hiring a contractor can also increase your vicarious liability risk as your circle of responsibility broadens. The right insurance coverage can help protect your business from vicarious liability claims.
Vicarious Liability Insurance
Vicarious liability is a day-to-day risk for many business owners, but there are several small business insurance policies that can help cover the cost of defending a vicarious liability claim:
- General liability insurance helps protect your business from claims of personal injury or property damage.
- Workers’ Compensation Insurance gives your employees benefits if they get a work-related injury or illness. It can also help cover your legal costs if your employee sues you.
- Professional Liability Insurance helps cover you and your small business if you make an error in your professional services.
Get Vicarious Liability Coverage Today
We’re an insurance company backed by more than 200 years of experience. We’ve helped more than one million small business owners and our specialists want to do the same for you. We can work with you to get the types of business insurance your company needs. Get a small business insurance quote today and learn how we can help you.
Last Updated: August 8, 2025
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