Negligence is acting in a way that no reasonable person would act, disregarding prudence and safe practices. In insurance, these actions often lead to losses and costly claims.
What is negligence?
Every day, you’re presented with situations that require you to act, and if you fail to act in a reasonable way, you can be accused of negligence. For example, it wouldn’t be a stretch to say that a reasonable homeowner who sees ice on their sidewalk would understand that someone might slip on it. A negligent homeowner, however, doesn’t do anything to remedy the situation.
Essentially, negligence is acting in a way that no reasonable person would act, disregarding prudence and safe practices. Negligent actions often lead to losses and costly claims on your home insurance policy.
Someone might be considered negligent if they:
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Fail to care for trees on their lot so one crashes on their neighbor’s home.
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Forget to turn off their faucet and cause water damage in the apartment below.
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Leave a door unlocked, allowing their house to be burglarized.
Note in these examples that sometimes negligence harms your property, but it can just as easily cause property damage or bodily harm for someone else.
Negligence in insurance claims
There are two ways that the concept of negligence comes into play in home insurance claims. First, if you're accused of negligence that causes property damage or injures someone else, a claim may be made that applies to your policy's personal liability coverage. This part of your policy is designed to cover you in circumstances where you may be negligent.
Personal liability insurance (sometimes called Coverage E or Coverage L, depending on your policy) may be able to help pay for:
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Repairs and legal expenses if you accidentally damage someone's property
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Medical bills and legal expenses if someone is accidentally injured on your property
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Medical bills and legal expenses if you are liable for the accidental injury of someone at another location
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An injured party’s loss of wages
There are also times where negligence may play a role when you file a claim for damage to your own property. In these cases, your insurance company may find that your negligence caused the damage and deny the claim.
Negligence in personal liability claims
Negligence commonly plays a role when someone makes a claim on your home insurance policy's personal liability coverage. When you've damaged someone's property or injured someone, your insurance company evaluates to what degree your negligence played a role in the other party’s property damage or physical injury. Depending on what the investigation reveals, your insurer then pays all, some, or none of the damages.
Every insurance policy is different, and many have exclusions that limit coverage depending on how negligent you are. Damage caused by an honest mistake, like accidentally throwing a frisbee through your neighbor’s living room window, is most likely covered. But ignoring your icy sidewalk until a neighbor slips and suffers an injury? That may spell trouble because a reasonable person could probably foresee the outcome.
Remember, too, your policy only covers accidental losses – not intentional ones. So while the damage caused by your errant frisbee is probably covered, intentionally throwing a rock at your neighbor’s home isn’t.
You should also note that having a claim paid doesn’t necessarily mean everything’s good with your insurer. Repeated claims stemming from your negligence may cause your insurance company not to renew your policy.
Negligence in property damage claims
Claims for property damage at your own home may also be impacted if your insurer determines you behaved negligently. Because your insurer likely requires you to take reasonable care of your property, it typically denies claims if it thinks you were negligent in maintaining your home.
Let’s say there’s a pipe leaking in your home that you do nothing about and end up with mold behind your walls. Most home insurance has limited coverage for mold, but your insurance company probably won’t pay because you were negligent about taking care of the leak.
Insurance companies may exclude negligence in home maintenance to protect against a moral hazard. A moral hazard is the chance the insurance company takes that you’ll take more risks with your home because you’re protected by home insurance. By refusing to pay for your negligence, the insurance company creates an incentive for you to take care of your house.
Gross negligence vs. negligence
When you’re talking about negligence in insurance, you want to distinguish between negligence and gross negligence. The law essentially expects you to act reasonably all the time, but it also accounts for the fact that people make mistakes. While those mistakes can cause harm, the people who commit them usually don't intend to hurt anyone. Those are the kind of mistakes that are usually classified as plain old negligence.
But there’s another level of negligence called “gross negligence,” and it describes behavior that is reckless or shows an extreme disregard for the safety of others. A common example happens with pets. In some states, you may be considered grossly negligent If you know your dog is vicious and you don’t take steps to protect others from attack.
3 key facts about negligence in insurance
Generally speaking, your homeowners insurance covers your negligence when it harms someone outside of your household but not when it damages your home. However, there are some other interesting coverage details about negligence in insurance that may be helpful to know, namely:
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Intentional acts are not covered. Accidents happen, and that’s what insurance is for, but insurance companies seldom, if ever, cover willful bad conduct.
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Your family is covered wherever they go. Homeowners insurance often helps pay for other mistakes you make out in the world, but there are some limitations. The first is car accidents. Car accidents are covered by auto insurance. Additionally, some policies have a premises liability endorsement that limits liability coverage to acts that occur on the insured premises (i.e., at your home). Take a careful look at your policy language to understand if this applies to you and what other limitations you might have on your coverage.
- Your insurance company may cover fraudulent claims. Say your neighbor lies about slipping on your icy driveway. Your insurer might have a duty to defend you if they sue, even if your insurer won’t ultimately pay for the fraudulent claim.
