Analysis and Evaluation of Risk Exposure - Strict Liability

Strict liability, sometimes called absolute liability, is a legal doctrine in tort law that makes a person responsible for the damages caused by their actions regardless of fault or intent. The elements of a strict liability tort are similar to the elements of a negligent tort (duty, breach, and injury) except that in a strict liability case, the victim doesn't need to prove negligence. It doesn't matter what sort of precautions the individual takes, or if the individual had good faith intentions. Strict liability is common in activities that are inherently dangerous, such as demolition projects, cases where animals are involved, storing explosives, or using hazardous materials.

However, the most common strict liability cases pertain to defectively manufactured products or drugs. In such cases, purchasers of the product, as well as injured guests, bystanders, and others with no direct relationship with the product may sue for damages caused by the product, regardless of the manufacturer's intent.

Most Common Strict Liability Torts include:

  • Liability in manufactured products
  • Housing of wild or ferocious animals
  • Abnormally dangerous activities (e.g., storing, transporting, or using explosives in a populated area)

In most cases, insurance companies will decline to cover activities that have a high correlation to causing strict liability torts. If they do offer coverage, the premiums will be adjusted higher in accordance with the higher risk assumed. Business Related Risk Exposures

You May Also Like

Related Articles
  1. Trading Strategies

    Adjust Market Strategies To Elevated ...

  2. Fundamental Analysis

    How to Create a Personal Risk Management ...

  3. Investing Basics

    Want to Beat the Market? Take on Some ...

  4. Trading Strategies

    Three Types Of Profit Protection Stops

  5. Professionals

    Worried About Stocks? Try on Convertibles

Trading Center
×

You are using adblocking software

Want access to all of Investopedia? Add us to your “whitelist”
so you'll never miss a feature!