Does General Liability cover property damage?

Learn essential insurance facts for small business owners to make sure you have the coverage you need.

Amy Beardsley
By Amy Beardsley
Published Mar 28, 2024
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Running a small business comes with its fair share of risk. Does general liability cover property damage? Well, it depends. Accidents happen. And when they do, the cost to repair or replace damaged property can be significant.

If you have general liability insurance, or if you’re looking to get it, know that coverage can depend on whose property is damaged and what caused it.

Jump ahead to learn more about:

What is general liability insurance?

General liability insurance can help protect against several types of accidents that can affect small business owners and the self-employed. This type of insurance can also protect you if you’re sued due to an injury or damages.

General liability policy costs can vary depending on your business; You can estimate your premium with a general liability calculator.

As for coverage, a typical general liability policy includes:

  • Bodily injury and property damage caused by your business.
  • Legal costs and settlements if someone sues your business.
  • Advertising injury and personal injury claims, such as defamation or infringing on someone’s copyright in your advertisement.

For example, if a non-employee slips in the icy parking lot of your business and breaks a leg, general liability insurance could help cover their medical bills and lost wages.

What kind of property damage does general liability insurance cover?

General liability insurance helps cover your business when you or your employees damage someone else’s property, including vehicles, buildings and other physical assets.

For instance, if a painter breaks a client’s window on their property while working, general liability insurance can help cover the cost of repair or replacement.

Or, let’s say you’re a nail technician and you accidentally stain a customer’s designer handbag with nail polish remover and they sue you to recoup their loss. General liability insurance could help pay for court and legal fees.

Does general liability insurance cover commercial property damage?

Unfortunately, the answer isn’t a simple “yes” or “no.” General liability covers damages or injuries that you (or your employees) cause to a third party, such as a customer, passerby, supplier or vendor. But that’s where it draws the line. A general liability policy does not generally protect property damage to your own business.

However, other types of business insurance can provide the type of coverage you seek. To protect your own business property, look for commercial property insurance or a Business Owner’s Policy (also called a BOP).

What type of insurance protects business property?

As a business owner, you’re susceptible to risks that could lead to your own property being damaged or lost. Setbacks can impact your operations, but commercial property protection or a BOP can address potential challenges head-on.

Commercial property insurance

Commercial property insurance can help protect your 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 (also known as business income insurance).

However, 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 protects your business property but does not cover other essential coverage for injuries, defamation lawsuits and damages to a third party’s property.

Business Owner’s Policy (BOP)

Commercial property protection isn’t your only choice to protect yourself from property damage. You can also opt for BOP insurance to combine general liability insurance with commercial property insurance in one convenient 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, and it can save your company up to 10%.

Bundling general liability and commercial property policies into a BOP can give you broad coverage that includes:

  • Property damage to your building and its contents.
  • Injuries your company, employees or products might cause to others.
  • Loss of income if a fire or other incident causes you to close unexpectedly.
  • 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 fire, water or another source damages your business property.

How can I help prevent business property damage?

Though total prevention to business property damage isn’t possible, finding your liability weak spots is key. Try these ways to protect yourself and your business from causing property damage:

  • Perform routine maintenance: Inspect your property to check for business hazards before they become problems.
  • Take necessary 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.
  • 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.
  • 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.
  • Get business insurance: Coverage that includes property damage (applied to your own things or someone else’s) can provide peace of mind.

Combining action with insurance coverage helps reduce the likelihood of property damage and it can help protect you against insurance claims and lawsuits.

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How NEXT helps keep small business owners safe

NEXT offers property damage coverage specifically designed for small business owners like you.

With NEXT, you can navigate coverage options, receive a quick quote, and secure a policy in less than 10 minutes. As soon as your payment is processed, your certificate of insurance is at your fingertips.

Start a free online quote with NEXT today.

Amy Beardsley
About the author

Amy Beardsley, insurance expert and contributing writer at NEXT Insurance, is a content marketing writer who specializes in small business coverage. Leveraging her background in the legal field, Amy brings a deep understanding of laws, regulations, and compliance requirements to her work. As a content marketing writer since 2016, she has contributed to publications like Legal & General, Berkshire Hathaway Specialty Insurance, Insurify, and NerdWallet. Her work has also appeared in CNBC, Kiplinger, and US News. When she’s not writing, Amy enjoys playing cards with her family and experimenting with new recipes.

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