Know the most common reasons for premises liability lawsuits and how to reduce your risk as a business owner. Get easy tips to prevent costly accidents.
Can your business survive an injury liability claim?
Customer injury claims cost an average of $30,000 per claim, and business vehicle accidents average $45,000.¹
Business owners can be financially responsible for employee injuries as well as customers, although not every business is legally required to carry worker’s compensation insurance. ²
We live in a litigious society, and you can’t stop someone from filing a lawsuit. However, you have the power to reduce your company’s exposure to injury claims and lawsuits.
By understanding the basic elements of premises liability, and developing common-sense procedures to prevent hazards, you can mitigate some of your company’s financial risk.
Common Premises Liability Claims
As a business owner, your legal duty of care extends to just about anyone who comes onto your property. Legally, people are grouped into “classes” according to their reason for visiting your business location.
The Three Legal Classes of Visitors
Invitee: An invitee is a person who enters your premises at your express invitation or the invitation of an employee. The invitation does not have to be in writing.
The invitation is made to transact business. The invitee enters your property for your mutual benefit. Invitees include customers, contractors, and more. Your employees are included in the invitee class because your relationship is mutually beneficial.
Licensee: A licensee is a guest for personal, rather than business or commercial purposes. For example, a dinner guest at your home would be a licensee. When it comes to businesses, those who enter the property are almost always Invitees, not Licensees.
Trespasser: Trespassers are persons who enter your property without being asked, and normally in violation of local trespassing laws. For example, a burglar would be a trespasser. So is a customer who refuses to leave when asked.
As a business owner, you have no legal duty to keep your property in a safe condition for trespassers. However, you aren’t allowed to purposely cause harm to trespassers.
For example you can’t set traps that would injure a burglar, and if you are aware of trespassers, you’re obligated to warn them of dangerous conditions. Just as in a private residence, you can only use deadly force in defense of your life or another’s. Deadly force is never legally justified to protect property.
Common Causes of Injury Claims
Slippery hard surfaces: Spills, rain, snow or ice carried into the building, waxed floors, wet floors from mopping, and other slippery floor conditions are common causes of slip and fall accidents.
Faulty stairs and escalators: Broken banisters, slippery steps, and mechanical failures are a leading cause of stairwell and escalator accidents.
Falling merchandise or inventory: Falling objects are a common cause of employee injuries, as well as customers.
Physical obstacles: Poorly placed electrical cords, protruding furniture, floor mats, floor door moldings, door stops, fallen merchandise, and other obstacles must be promptly eliminated or repaired.
Inadequate lighting: Inadequate lighting can hide multiple hazards inside and outside of your business, including curbs, physical obstructions, steps, potholes, and even criminals set on robbing your customers.
Parking lots: Parking lots and parking garages are common locations for pedestrian injuries due to concrete car stops, potholes, misdirected cars due to faded pavement arrows, uneven pavement, poor signage, ongoing construction, and criminal activity.
Sidewalks: Broken, cracked, uneven or buckled sidewalks are a menace to pedestrians. You aren’t normally responsible for the maintenance of state, county, city, village or other government-controlled sidewalks.
However, in some cases, the maintenance of sidewalks is shared between the government entity and business owner. It’s important to know when you’re responsible for maintenance of sidewalks adjacent to your business.
Ice and snow: Business owners are responsible for clearing and de-icing walkways and parking lots owned or controlled by the business. Most businesses are also responsible for clearing public walkways adjacent to the business.
Food poisoning: Customers may be sickened due to poor food handling or storage, or the transmission of disease from food-service employees.
Elements of Liability for Businesses
Premises liability is a legal doctrine applying to business owners. Under this doctrine, a business owner can be held legally responsible for accidents and injuries which occur on their property, so long as the business owner was negligent.
It helps to understand some of the terms used in accident claims and lawsuits.
Liability means responsibility. The at-fault person is usually liable for the accident victim’s damages.
Duty of Care: Premises liability begins with the legal “duty of care” you have as a business owner to do everything reasonably possible to assure your property is safe, and that your customers, patrons, clients, employees, and others legally upon your property are safe from undue harm and injury.
Reasonableness: Your legal duty of care is a reasonable obligation. This means as a business owner you aren’t required to take extraordinary measures to keep the property safe. Instead, you are only required to doing everything within reason to make your property safe.
For example, a restaurant owner would not be under a legal duty of care to have multiple employees continuously follow around every customer in the restaurant to clean up every drop of spilled liquid, or every piece of dropped food. To do so would be unreasonable, and not required by law.
However, the same restaurant owner would have a legal duty to keep the floor free from hazards, and may have employees monitor the floor for spills at regular intervals, particularly during peak business hours.
Knowledge: To succeed in a liability claim, the injured party must show you knew or should have known there were hazardous conditions on your property which were likely to cause injuries.
Breach of Duty: When you knew or should have known a hazardous condition exists, and you failed to repair or eliminate that hazard, you effectively breached your duty of care by failing to take appropriate action to protect others from undue harm or injury.
Negligence: Breaching your duty of care constitutes negligence.
Direct and Proximate Cause: Your negligence becomes the direct and proximate cause of a person’s injuries. Direct and proximate cause means there were no other intervening factors, other than your negligence, which could have caused the injuries.
Damages: Injury claim damages typically include bills for medical treatment and physical therapy, out-of-pocket expenses related to the injury, lost wages, and pain and suffering.
Example: Business Owner Negligence and Liability
A clothing store owner received numerous complaints over a period of weeks that the mirrors in the dressing rooms were loose. The store owner knew the big, heavy mirrors were loose but didn’t take the time to have them secured, breaching their duty of care.
One day, a customer was trying on clothes when a large mirror broke away from the wall in pieces, knocking the young woman to the floor and cutting her face in several places.
The customer required hundreds of stitches to her face. Despite attempts at reconstructive surgery, she was scarred for life.
The store owner was negligent in not securing the mirrors. Because the customer wouldn’t have been hurt and disfigured if not for the dangerous mirror, the store owner is liable for the customer’s damages, including her extreme emotional distress.
Preventing Slip and Fall Accidents
Slip and fall accidents are the most common reason for emergency room visits in the community and are a leading cause of workplace injuries.
Implementing procedures for preventing common causes of trips, slips, and falls will significantly mitigate potential losses. Keep in mind that a well-documented practice of reasonable precautions is a strong defense against allegations of negligence.
Reasonable precautions include:
- Clean up spills as soon as they occur
- Replace unsafe flooring, install mats and add abrasive strips
- Mark spills with warning signs
- Mop or sweep up debris from floors
- Remove obstacles from walkways
- Secure mats and carpets with tape to ensure they remain flat
- Close cabinets or drawers when not in use
- Keep workplaces and walkways well-lit
- Replace burned-out light bulbs and faulty switches
- Ensure employees are wearing correct footwear
General Loss Mitigation Procedures
Good business practices, including employee training, will reduce your liability exposure for slip and fall accidents, and most other kinds of premises liability risks.
Reasonable business safety procedures might include:
- Immediately repair or remove hazards as soon as they are known
- Avoid using extension cords in public areas
- Have proper trash containers that are emptied often to avoid overflow
- Maintain flooring, restrooms, aisles, fitting rooms, shelving, and walkways at regular intervals
- Use industry standard cleaning products
- Regularly inspect and maintain elevators and escalators
- Implement adequate security measures, particularly in areas know for rising criminal activity. Measures may include surveillance cameras, increased lighting in parking areas, and hiring security personnel.
- Regular maintenance of outdoor areas, including sidewalks, children’s play areas, parking lots, and lighting
- Conduct periodic inspections for hazards
Loss mitigation requires good management:
- Periodic employee training regarding safety measures and reporting of hazardous conditions
- Employee training for assisting ill or injured customers, including basic first-aid
- If you have an Automated External Defibrillator (AED) on site, be sure employees know how to use it
- Keep up-to-date maintenance records, including actions taken to remove and repair hazardous conditions
- Maintain records of all government inspections and reports
- Purchase worker’s compensation insurance as required
- Invest in adequate premises liability insurance
What to Do When an Incident Occurs
You should have clear policies and procedures in place for managing injuries occurring on your premises, whether to a visitor or an employee.
What you or your employees do and say after an incident will have a big impact on any subsequent injury claims made against the company.
Offer Medical Attention: Administer first aid. If the injury appears serious, or the injured person or their companion asks for emergency medical services, do not hesitate to call an ambulance.
Notify police for incidents involving physical assault, rape, or vehicle accidents such as a pedestrian hit in the parking lot.
Assist employees in calling for help. Post emergency information cards near every telephone in your business with phone numbers for emergency services (including any numbers that must be dialed to reach an outside line) and the street address for the building.
Gather Documentation: Use an Incident Report Form to gather the full name, address, phone numbers and other contact information for the injured party and any witnesses, and to document the date, time, and circumstances of the incident.
Take advantage of this sample Slip and Fall Incident Report to document the event.
Secure Photographic Evidence: Preserve any footage captured by your surveillance or security cameras leading up to and including the incident. You can take photographs of the location where the incident occurred, but you must ask permission to photograph the injured person or their companions.
Promptly Notify Your Insurance Company: Regardless of the circumstances, you must put your liability carrier on notice of a potential claim.
Your liability policy is a binding contract, and much like an auto policy, your insurance agreement almost certainly requires you to notify the insurance company and cooperate with their investigation of a claim.
A typical notice clause has language like this:
“Insured (you) agrees to notify the insurer (your insurance company) of any accidents and thereafter comply with all information, assistance, and cooperation which the insurer reasonably requests, and agrees that in the event of a claim the insurer and the insured will do nothing that shall prejudice the insurer’s position…”
If the person who slipped and fell was an employee, promptly contact your workers’ comp insurance provider to confirm the employee will receive follow up medical treatment.
Follow Up: Within 24 hours of the incident, make a courtesy call to the injured person. Make it brief. Let them know you are concerned about their well-being and ask if medical care was needed. Since you should have already reported the incident to your insurer, tell the person they may be hearing from the insurance company.
Beware of Admissions Against Interest: Watch what you say. Don’t apologize, make excuses for the circumstances of the incident, or confirm that the person “looked in bad shape.”
Even polite comments can be taken as an admission of liability for the person’s damages. If asked, say the insurance company will be able to answer any questions.
Preserve Evidence: Preserve any evidence, such as a broken piece of machinery, tools, a broken tile, or a torn floor mat. You must also preserve any notes, emails, reports, maintenance records, and any other communications regarding the incident.
Never hide or destroy evidence. You don’t have to hand it over to the injured person without a subpoena, but you must keep it as-is. In legal parlance, spoliation of evidence can be treated as an admission of guilt.
Handling Fake Injury Claims
Slip and fall “scams” happen all the time. You may think your business is hazard free, and it may very well be. Unfortunately, some people will feign accidents and injuries to bilk your insurance company.
A common fraud is exaggerating the scope and severity of a minor injury, like a simple sprain that leads to disability claims.
Some fake injury claims are “staged” by one or more parties to convince you they were injured as a result of a hazardous condition on your property. Scammers have been known to bring liquids and purposely spill them on the floor. Others may have cohorts who act as witnesses, not only to the accident but as to the “pain and suffering” of the person who fell.
It’s almost impossible to thwart such fraud completely, but with immediate and proper documentation of the circumstances, you’ll help the insurance company uncover the truth.
Business owners can be liable for injuries that happen far from the building. Learn what happens when an employee crashes the company car.
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