TORT

Tort – Civil Wrong Leading to Liability

In plain language: A tort is a type of wrongdoing. It's when someone violates the rights of someone else unintentionally or on purpose and causes harm. Torts can be anything from causing a car accident to spreading harmful rumors about someone. 

Technical definition: In the civil law context, a tort is a private or civil wrong or injury. The wrong is committed by one party, the tortfeasor, against another, the plaintiff, resulting in physical or emotional harm, property damage, or financial loss. Torts generally fall into three categories: negligent torts, strict liability torts, and intentional torts. The plaintiff may file a tort claim against the tortfeasor in a tort lawsuit to seeks monetary damages as a legal remedy. 

Imagine you were driving home when another driver hit your car and injured you. You may file a tort lawsuit seeking compensation for your physical injuries and the damages to your vehicle. Equally, posting harmful and false claims about someone's character on social media could count as defamation, another tort. 

TL;DR

A tort is a legal wrong leading to liability. 

It is the basis for many insurance claims and civil lawsuits. 

Common misunderstanding is thinking torts are only intentional. 

Best practice: Understand the main types of torts and their implications. 

What Is a Tort in Insurance?

In insurance, a tort carries quite some weight. It translates to claims, which could mean potential liability for the insurer. This is because if the policyholder is found guilty of a tort, such as negligence, then the insurer will be the one potentially footing the bill for damages or settlements. The importance of torts in insurance is especially prevalent in auto, home, and business liability policies. 

Torts are categorized into three main types: intentional torts, negligence, and strict liability. 

Intentional torts are when the tortfeasor – the party that committed the tort – intentionally harms the plaintiff, such as in cases of defamation, false imprisonment, or battery. 

Negligence torts happen when the tortfeasor fails to meet a certain standard of care, like a driver who caused an accident because they weren't paying attention to the road. 

Strict liability torts are when the tortfeasor is held liable regardless of how meticulously they tried to prevent causing harm, such as in cases involving dangerous activities like demolition or handling wild animals. 

These tort types form the building blocks of many insurance policies, with separate coverages designed to respond to incidents involving them. 

Key Related Terms to Know

Negligence – When a party fails to take reasonable care, leading to harm. 

Strict Liability – Liability that applies regardless of the defendant's efforts to prevent harm. 

Intentional Torts – Deliberate actions that result in harm. 

Tortfeasor – The party that committed the wrong or harm. 

Tort Claim – A civil lawsuit brought by an injured party seeking to recover damages. 

Tort Law – The area of law governing tort claims and the principles behind them. 

Common Questions About Tort

What is the purpose of tort law? 

Tort law serves to right civil wrongs that have caused harm to an individual. It provides a legal framework for an injured party to seek redress from the person or entity that caused the harm. This usually comes in the form of monetary damages, awarded to the injured party, aimed at placing them back in the position they would've been had the tort not occurred. 

How does a tort differ from a crime? 

While both involve wrongdoing, a tort is fundamentally different from a crime. A tort is a civil wrong, while a crime is a violation of criminal law. A tort stems from a violation of private rights resulting in injury to a particular individual. Criminal offenses, on the other hand, are perceived as harm to the whole community. The remedies also vary – torts typically result in monetary damages, while crimes can lead to imprisonment, fines, or other penal sanctions. 

Who decides whether a tort has been committed? 

In the U.S., it's typically a judge or jury in a civil court that decides whether a tort has been committed. They assess the facts of the case, apply the relevant tort law principles, and determine whether the defendant committed a tort, how much liability they bear, and the amount of damages to be awarded. 

What role do torts play in insurance claims? 

Torts often form the basis of liability insurance claims. For example, in a car accident resulting from a driver's negligence, the injured party may make a tort claim against the negligent driver. The driver's auto insurance would then step in to handle the claim, either settling or defending the lawsuit. 

Tort vs. Crime

In tort, the action is initiated by the injured party (the plaintiff), while in a criminal case, proceedings are initiated by the state or the federal government. This distinction is crucial for insurance professionals when explaining coverage limitations to clients, as most insurance policies exclude deliberate and criminal acts but may cover unintentional ones. 

Real Claim Examples Involving Tort

Scenario 1: A small business owner hired a contractor to do renovations. The contractor negligently left a sharp tool lying around, which the owner accidentally stepped on, getting seriously injured. This is a negligence tort, where the business owner could potentially file a claim against the contractor's general liability insurance. 

Scenario 2: In a residential community, a resident constantly played loud music at night, disrupting his neighbors' peace and causing emotional distress. The affected neighbors could file a nuisance claim, an intentional tort, against the resident. If found liable, the resident's home insurance might cover the damages, provided there is personal injury coverage. 

Scenario 3: A patient suffered significant harm due to a surgeon's oversight during a surgical procedure. The patient could file a medical malpractice claim, a type of negligence tort, against the surgeon. The surgeon's professional liability insurance policy would step in to handle this claim. 

Limitations and Common Mistakes

Tort claims may not be valid if: 

The plaintiff willingly participated in a high-risk activity, understanding the potential harm (assumption of risk). 

The plaintiff contributed to the harm they suffered (contributory or comparative negligence). 

Tort claims can become an E&O exposure when insurance professionals: 

Underestimate potential damages, leading to lower insurance limits. 

Fail to thoroughly explain policy exclusions related to intentional or criminal acts.

How to Explain Tort to Clients

Personal Lines client "A Tort is kind of like someone doing something wrong and that wrongdoing causes some harm. These wrongs can be anything from causing a car accident to saying harmful stuff about you that’s not true. And, if you're hurt by one of these wrongs, you could ask the person who did it to compensate you for your loss." 

Small Business owner "In your business, think of a tort as a civil misstep. Say someone gets hurt in your store due to a slippery floor or an employee spreads false rumors about a competitor - these could be considered torts. It’s basically when you or your business unknowingly breach someone else’s rights, and have to compensate them."  

CFO or Risk Manager"A tort is a civil wrong causing another to suffer loss or harm resulting in legal liability for the person committing the tortious act. So, it's important to identify potential areas where your organization might be liable for harmful incidents and carry appropriate liability insurance to cover these risks."