What is negligence?
Every day, you’re presented with situations that require us 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. In insurance, these actions often lead to losses and costly claim. Someone might be considered negligent if they:
- Fail to care for trees on their lot so one crashes on their neighbor’s home.
- Forget to turn off their faucet and causes water damage in the apartment below.
- 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 for someone else.
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.
Negligence in insurance claims
Insurance companies do consider negligence when evaluating claims. For example, if there’s a claim on your Coverage E, 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 throwing a rock﹘even accidentally﹘might not be covered because a reasonable person could probably see how that was going to end.
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.
Additionally, your homeowners insurance policy most likely requires you to take reasonable care of your property, so your insurer will typically deny 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 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.
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. But there are some other interesting coverage details about negligence in insurance that may be helpful to know, namely:
- Intentional acts are not covered. Accidents happen, and that’s what insurance is for, but insurance companies seldom, if ever, cover willful bad conduct.
- Your family is covered wherever they go. Homeowners insurance often helps pay for other mistakes you make out in the world. One limitation here is car accidents. For that, you need auto insurance.
- Your insurance company may cover fraudulent claims. Say your neighbor lies about slipping on your icy driveway. Your insurer most likely has a duty to defend you if they sue.