Definition of property damage liability insurance and bodily injury
Property damage can mean damage to real estate, such as buildings, garages or land itself. It can also refer to damage to personal property, which is essentially property that can be moved — things like cars or other vehicles, equipment, furniture, fixtures or artwork.
In personal auto insurance and commercial auto insurance, property damage liability coverage is often required. If you’re involved in a covered event (such as an accident) the insurance company could pay for some of the damages you inadvertently cause to other people’s cars or trucks, public property and private property.
If you’re a business owner, you can be held liable for the damage you or your employees may cause. And that damage could potentially be expensive. To help offset some of that financial risk to your business, business insurance is a sensible precaution.
Property damage liability insurance is a type of business insurance that could help pay the cost to repair or replace property that you or your employees damage while working. It’s commonly part of a general liability insurance policy, which also includes protection for bodily injury, or medical costs if a non-employee gets hurt at your business or job site.
Bodily injury liability covers damage or injury to a person if they’re hurt in an accident on your premises or due to your business operations. This could include medical costs and related expenses when someone gets hurt, such as:
- Hospital charges
- Doctor visits
- Medical equipment, like crutches
- Lost wages for the injured person
It doesn’t pay if you or your employee are hurt from a work-related incident. General liability only covers people outside of your business.
The same is true for property damage liability coverage: It could pay for damage you cause to someone else’s property, but it does not protect your own business property. To protect your business’s own real estate, inventory and equipment, you’ll want commercial property insurance coverage as well. A Business Owner’s Policy (BOP insurance) bundles general liability insurance and commercial property insurance into a single policy that’s often more cost-efficient.
What does property damage liability cover?
Property damage liability helps cover other people’s property, whether it’s owned by a client, customer, vendor or someone unrelated to your business. It kicks in when their property is damaged, destroyed or loses its value or functionality.
Property damage liability insurance could help cover things like:
- Repairing a home, storefront, shed or other building**
- Fixing a damaged car, truck or other vehicle
- Correcting damage caused by your employee or work equipment
- Paying legal expenses if you’re sued over the property damage
Suppose you own a carpet cleaning business, and your employee mistakenly damages the wood floor beneath the carpet. Property damage liability insurance could help cover the repairs or replacement of the wood floor.**
Or, say your landscaping business is using some heavy-duty machinery to move earth around a client’s backyard. An employee backs up too far and accidentally destroys the neighbor’s fence. Your property damage liability insurance could kick in to help cover the cost of repairing the fence.
Typically, a general liability policy includes property damage liability as part of its coverage. But auto insurance and general liability insurance policies have a care, custody and control (CCC) exclusion — a part of the contract that specifically excludes items under your care from being covered. This means it usually does not cover theft or property that goes missing while it’s in your care.
How much property damage liability coverage do I need?
You don’t want to pay for more coverage than you need, but you do want enough property damage liability insurance to cover your risk.
Your business’s risk level depends on many factors, including:
- The type of materials or equipment your business handles
- The industry or type of work you do
- The location of your business
- The kind of clients you work with
Common general liability insurance limits are $1 million per incident and $2 million aggregate per policy period. A commercial umbrella policy for your business could help you handle some costs that go beyond your property damage liability limits up to $4 million.
An independent consultant who works at home likely will not face the same level of risk as a construction business that works regularly with the public, heavy equipment or volatile chemicals.
How much property damage liability insurance you need also depends on contract requirements. Some landlords, vendors or clients might have minimum coverage requirements for general liability insurance, for example.
You should also keep in mind how much your business is worth and what you could stand to lose if you were sued.
Does General Liability cover property damage?
General liability insurance typically includes property damage liability, along with bodily injury liability, advertising liability and legal costs if someone takes legal action against your business.
With a general liability policy, your business could be covered if, say, a customer slips on ice in front of your store or your employee accidentally breaks a client’s window. The property damage liability portion of your coverage helps protect your business when third-party property is involved.
Curious what a general liability policy could cost? Our general liability calculator can show you how much a policy could cost for your business based on your state and industry.
What is property damage liability car insurance?
Personal and commercial car insurance usually requires liability coverage for both other people’s property and their personal safety. With this coverage, the insurance company pays out (up to policy limits) if you damage someone else’s property while driving.
It could cover things like:
- Other people’s vehicles
- Buildings, whether publicly or privately owned
- Private property, like mailboxes or fences
- Public property, like traffic signs or guardrails
A commercial auto insurance policy typically includes property damage liability and bodily injury liability coverage, much like private auto insurance. Property damage liability doesn’t cover your own vehicle, though. For that, you may need to add collision and comprehensive coverage to your auto policy.
