Vicarious Liability: Examples and How to Avoid It

What Is Vicarious Liability?

Vicarious liability is a situation in which one party is held partly responsible for the unlawful actions of a third party. The third party also carries their own share of the liability. The word vicarious is used here to describe the fact that the liability imposed in indirect.

Vicarious liability can arise in situations where one party is supposed to be responsible for (and have control over) a third party and is negligent in carrying out that responsibility and exercising that control.

Key Takeaways

  • The term "vicarious liability" refers to situations wherein one party is made liable for the negligent actions of a third party that they were responsible for.
  • Employers have a greater chance of avoiding vicarious liability by proactively exercising reasonable care to prevent any negligent behavior on the part of their employees.
  • Like an employer and their employees, parents can also be held vicariously liable for negligent actions carried out by their children.

Understanding Vicarious Liability

An employer can be held liable for the unlawful actions of an employee, such as harassment or discrimination in the workplace. An employer might also be held liable if an employee operates equipment or machinery in a negligent or inappropriate way that results in damages to property or personal injury.

If a construction worker mishandles the controls of a crane and topples the wall of a nearby building that was not slated to be worked on, the company overseeing the construction will likely face vicarious liability. If an engineer likewise loses control of a train, and it proceeds down the tracks on its own, the company that owns and operates the train may face vicarious liability for any damages and injury afflicted by the runaway locomotive.

Even though the employer is not the one who committed the unlawful act, the employer is held liable because it is considered responsible for its employees' actions while they are on the job and it is considered to be able to prevent and/or limit any harmful acts performed by its employees. The employer may be able to avoid vicarious liability by exercising reasonable care to prevent the unlawful behavior.

Example of Vicarious Liability

In the case of the Exxon Valdez oil spill, the Exxon Shipping Company came under vicarious liability for the series of events that led to 10.8 million gallons of crude oil spilling into the sea and affecting the shore. Among other factors, the company was held accountable for lack of supervision on the captain, fatigue among crew members onboard the oil tanker, as well as the condition of radar equipment that might have helped prevent the ship from running aground. However, due to the multiple appeals, changing award amount, and the gray area of maritime law rule of a ship owner being responsible for actions of an employee, this is a particularly complicated example of vicarious liability.

Special Considerations

Another common source of vicarious liability occurs when a child behaves negligently. The parent can sometimes be held vicariously liable for the child's actions. One situation wherein this might occur is if a child injures or kills someone while driving. The parents can bear responsibility for allowing the child to have access to the vehicle.

Does There Have to Be Malicious Intent Involved to Allege Vicarious Liability?

No. An accidental incident can still be considered vicarious liability, such as a slip and fall on company property.

How Can You Protect Yourself From Vicarious Liability Lawsuits?

There are several types of business insurance available that aim to protect business owners from vicarious liability lawsuits, including general liability, errors and omissions, and umbrella insurance, which covers anything that falls outside the purview of general liability insurance.

What Are Some Other Examples of Vicarious Liability?

There are many different circumstances where you may be held vicariously liable. If you loan your car to someone and they cause a traffic accident, you could be held vicariously liable. There have also been cases of vicarious liability where police departments were held liable when duty weapons had been used in crimes after weapons were left unsecured during off-duty periods.

Article Sources
Investopedia requires writers to use primary sources to support their work. These include white papers, government data, original reporting, and interviews with industry experts. We also reference original research from other reputable publishers where appropriate. You can learn more about the standards we follow in producing accurate, unbiased content in our editorial policy.
  1. Digital Repository, Villanova University. "Oil Over Troubled Waters: Exxon Shipping Co. v. Baker and the Supreme Court's Determination of Punitive Damages in Maritime Law," Page 249.

  2. Exxon Valdez Oil Spill Trustee Council. "Details About the Accident."

  3. Oyez. "Exxon Shipping Co. V. Baker."

  4. California Accident Attorneys Blog. "Department Responsible For Officer's Failure to Secure His Gun."

Take the Next Step to Invest
×
The offers that appear in this table are from partnerships from which Investopedia receives compensation. This compensation may impact how and where listings appear. Investopedia does not include all offers available in the marketplace.
Service
Name
Description