Small businesses face a variety of legal liabilities. For instance, businesses may be sued by customers or employees for discrimination, by business associates for breach of contract, or by workers for wage and hour violations. Another potential liability is third-party claims for bodily injury caused by the company's negligence. While any bodily injury claim is a cause for concern, it's especially worrisome when it includes an action for wrongful death.
What Is Wrongful Death?
A wrongful death action is a civil claim for financial compensation filed by the family or estate of a person who died as a result of the unlawful actions of another party. The claim is intended to compensate the deceased person's survivors for their loved one's death. Wrongful death claims against businesses can arise from auto accidents, medical malpractice incidents, product defects, workplace accidents, and slips and falls. Here's an example.
An employee of your construction company is using a company truck to deliver urgently-needed tools to a job site. The worker is driving fast and loses control of the truck while rounding a curve. He crashes the truck into another vehicle, killing the 30-year-old male driver. The decedent's wife files a wrongful death claim against your firm, alleging that your employee negligently caused the accident that killed her husband and deprived her of his support and affection.
Some harmful acts can result in both criminal prosecution of the perpetrator and a wrongful death claim by the decedent's relatives. In the truck accident described above, the employee might be prosecuted by the local government authority for reckless driving.
When cases involve both a crime and a wrongful death action, the claim is usually initiated after the criminal trial has concluded.
Who Can File Wrongful Death Claims?
In most states, only the deceased person's spouse and relatives (by blood or adoption) may collect damages via a wrongful death claim. Claimants may include adult children, minor children and grandchildren, parents, siblings, and other family members when allowed by the court. Friends, co-workers, step-children, and other individuals not related to the decedent aren't eligible for damages. If the deceased person has no surviving relatives, the estate's legal administrator or executor may file a suit.
Generally, only one wrongful death claim may be filed as a result of a single death. One person files a suit on behalf of all parties eligible for damages. This ensures that the defendant won't have to defend multiple suits stemming from the same death.
Damages They Might Seek From Your Business
If a wrongful death action is filed against your business, what damages can the plaintiffs claim? The answer varies by jurisdiction but many states permit plaintiffs to seek damages for the following:
- Damages suffered by the deceased person before their death, including property damage, pain and suffering, mental anguish, and medical expenses.
- Funeral and burial costs and travel expenses incurred by survivors
- Loss of financial support, including wages and benefits the decedent would have earned
- Loss of inheritance
- Loss of services the decedent provided
- Loss of love, affection, care, and nurturing
- Pain and suffering of survivors
- Punitive damages (when allowed by law) if the death was caused by an egregious act committed by the defendant
Wrongful death claims are subject to a statute of limitations that begins at the time of death. The limitation period is typically between one and four years. Once a wrongful death claim has been settled, the damages are distributed to the claimants according to state law.
In some states, a business could be hit with a survival suit as well as a wrongful death suit. A survivor suit is a lawsuit brought by the decedent's estate (not surviving family members) to compensate the estate for damages the decedent suffered before their death.
The estate may seek damages for pain and suffering the decedent endured and medical expenses they incurred after the injury and before their death. The estate may also sue for funeral and burial expenses incurred by the estate. Damages awarded to the estate are distributed to the decedent's heirs based on a will or other legal document.
A survivor suit compensates the deceased person (their estate) for losses they sustained before their death. A wrongful death claim compensates the decedent's surviving relatives.
Liability Insurance and Wrongful Death Claims
Commercial liability policies treat wrongful death claims in the same manner as other bodily injury claims. If the plaintiff files a claim alleging that negligence on the part of your business or an employee triggered the accident that caused the decedent's death, the claim may be covered by your general liability, auto liability, or other liability insurance.
The type of policy that will respond to a wrongful death claim depends on the nature of the claim and the circumstances of the accident. A claim stemming from an auto accident may be covered by your auto policy. Likewise, a claim involving a product you sold may be covered by your general liability policy.
How to Guard Your Business Against Wrongful Death Claims
Here are some things you can do to protect your business from wrongful death claims.
Assess Your Vulnerabilities
First, you should assess your operations for vulnerabilities. Many wrongful death claims arise from accidents involving autos. If your company uses vehicles in its operations, auto accidents could generate wrongful death claims against your firm. If your company is a manufacturer, then design defects, manufacturing defects, or marketing mistakes could generate wrongful death claims against your firm.
Buy Adequate Insurance
Once you've identified potential sources of claims, you can insure your business against those claims by purchasing the right insurance policies. Wrongful death claims against your business that arise from auto accidents will likely be covered by a business auto policy. Claims stemming from injuries caused by product defects should be covered by product liability insurance.
Practice Workplace Safety
Many accidents can be prevented by implementing an effective workplace safety program. Your program should address your areas of vulnerability. For instance, if auto accidents are a risk, be sure your program includes training in road safety and avoiding driver distractions.