What property damage can General Liability insurance cover?
General liability insurance is designed to address accidental third-party property damage. If the damage is sudden and unintentional, coverage may apply.
However, coverage can depend on the circumstances. For example:
- Intentional damage is typically not covered.
- Damage to your own business property is generally not covered under general liability.
So, if your business unintentionally damages someone else’s physical property, general liability insurance may help cover the costs of the accident.
Property falls into two categories: real property and personal property.
- Real property refers to land or things attached to land. This might include a building or a sign post or trees sitting on the land.
- Personal property is all other types of property. This includes your stuff — things you own and can move around, like clothes, cars, art, jewelry and electronics.
Property is considered damaged if it:
- Loses monetary value, or
- Loses functionality
1. Damage to a client’s building or structure
Say you’re a painter who breaks a client’s window while working on their property. General liability insurance could help cover the cost.**
Or, for example, say you run a landscaping business and your equipment accidentally damages a client’s irrigation system. General liability insurance coverage may help address the claim.
Other examples may include:
- Damaging a client’s flooring during installation work
- Cracking tile while moving equipment
- Breaking cabinetry during renovations
In many cases, general liability insurance can help with the cost to repair or replace that property.
2. Damage to a customer’s personal property
Say you’re a nail technician and you accidentally stain a customer’s designer handbag and they sue you to recoup their loss. General liability insurance could help pay for court and legal fees.
Other examples might include:
- Spilling cleaning solution on a client’s laptop
- Knocking over a vase while working in a client’s home
- Bursting a pipe that ruins your client’s wardrobe
If your work accidentally damages someone else’s belongings, general liability insurance may help with repair or replacement, so you’re not paying for expenses fully out of pocket.
Does General Liability cover damage to your own property?
General liability can help cover damage your business causes to someone else’s property, such as a customer, passerby, supplier or vendor.
But a commercial general liability policy generally does not help cover damage to your own business property (for example, your building, computers, tools, inventory, products, business furniture and fixtures, or equipment).
What type of insurance can help with your own business property?
Some types of business insurance can provide coverage for your own business property. For your own protection, look for either commercial property insurance, Business Owner’s Policy (also called BOP insurance), or tools and equipment insurance.
1. Commercial Property insurance
Commercial property insurance can help protect your own business from property damage. It can help protect your business gear, inventory, equipment, buildings and income if a fire or another covered event requires you to close temporarily (if your policy includes business income insurance).
The cost of commercial property coverage depends on a number of factors, including your company’s risk level, total property value, operations, claims history and location.
Commercial property insurance can help protect your business property but does not typically include liability coverage for injuries, defamation lawsuits and damages to a third party’s property.
2. Business Owner’s Policy (BOP insurance)
BOP insurance combines general liability insurance with commercial property insurance in one convenient, and often more affordable, package.
A BOP can be custom-made to match the needs and risks of your company and industry. Because coverage is personalized to each business, the cost can vary. But you’ll usually pay less for BOP coverage than if you buy two separate policies.
Bundling general liability and commercial property policies into a BOP can give you broader coverage that includes:
- Property damage to your building and its contents.
- Injuries your company or employees might cause to others.
- Loss of income if a fire, theft, vandalism or other incident causes you to close temporarily for repairs.
- Some court and legal fees if you need an attorney.
- Copyright infringement in your advertising, such as libel, slander or other advertising mistake.
- Inventory replacement if a covered event damages your business property.
3. Tool and Equipment insurance
Tools and equipment insurance, also called inland marine insurance, can help with protection for the work gear you bring to a job site. It could replace or repair your tools and equipment if it gets stolen or damaged on the job. You can get protection from some financial losses if the tool storage shed or trailer gets broken into, or if your contractor accidentally breaks the tools you need to finish the job.
Note that at ERGO NEXT, this coverage is only available for contractors and cleaning businesses.
What property isn’t covered under General Liability?
General liability insurance is designed to address some claims around damage you or your employees cause to other people’s property — but it doesn’t cover everything related to property damage. Depending on your policy, general liability often doesn’t help cover:
What else could General Liability insurance cover?
In addition to protection from property damage, commercial general liability insurance can help protect you in other ways.
A typical general liability policy includes:
- Bodily injury coverage for non-employees hurt at your business.
- Legal costs and settlements for some legal actions against your business.
- Advertising injury and personal injury claims, such as defamation or infringing on someone’s copyright in your advertisement.
General liability policy costs can vary. You can estimate your monthly or annual premium with a general liability calculator or see the exact price you’ll pay in about 10 minutes if you get a quote.
7 tips to help prevent business property damage
Total damage prevention to business property isn’t possible, but finding and fixing your weak spots is key. Try these tips to protect yourself and your business from property damage:
- Perform routine maintenance: Inspect your property to check for business hazards before they become problems. Keep your building up to code.
- Take safety precautions. Use protective measures such as safety barriers, mats or covers when working on projects that could potentially cause damage. Ask clients to remove valuables from the areas where you’re working.
- Get business insurance: Coverage that includes property damage (applied to your own things or someone else’s) can help share the risk.
- Install a security system: Cameras, alarms and access control measures can deter potential intruders and record mishaps to back up your story in a legal claim.
- Install weatherproofing and fire safety measures: This could include storm windows, smoke detectors, fire extinguishers and sprinkler systems.
- Train employees: Proper safety procedures and emergency protocols can minimize the risk of accidents that could lead to property damage.
- Keep detailed incident reports: Documentation is helpful if you need to file an insurance claim or defend yourself in a lawsuit.
Combine action with insurance protection to help reduce the likelihood of property damage, insurance claims and lawsuits.
