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As a small business owner, you’re in business to help your clients. That’s why there are few feelings worse than when you damage a client’s property. It’s awkward, embarrassing, and can be downright devastating for your business. But unintended damage can happen, and when it does, your property damage liability insurance covers the cost of repairs to your client’s property.
Property damage liability is one of the coverages within general liability insurance. Sit tight, and we’ll give you the scoop on what property damage liability covers so you can make sure you have the protection you need to avoid making a cold-sweat-inducing situation even worse.
What is property damage liability?
Within the context of general liability insurance, property damage liability entails harm to another person’s or business’s property. The property must be tangible in the sense that you can touch it, like a jacket, table, or smartphone.
Imagine you are a carpet cleaner. In the course of cleaning a customer’s living room carpet, you accidentally knock over a lamp and break it. That’s property damage. It involves harm to the property of a third party — in this case, your customer.
Be aware, however, that property damage liability does not always involve the destruction of property. It can also entail the accidental loss of a third party’s property.
To return to the example of the carpet cleaner. If, as part of your job, you remove your customer’s throw rug so that you can clean it at your facility, and it is accidentally lost, this also qualifies as property damage. The harm, in this case, is the loss of property. To ensure you’re covered for incidents like this, check whether your general liability policy includes a provision called “care, custody, and control” (CCC). If it doesn’t or has a specific CCC exclusion, you may be on the hook to cover the expense yourself.
Whether it’s an honest mistake, a clumsy accident, or just sheer bad luck, property damage can happen in ways you might never expect. Being prepared for potential claims is a wise strategy to protect your business assets as a business owner.
What does a property damage claim cover?
Property damage claims generally fall into one of two categories:
- Damage to, destruction, or loss of tangible property: When you or your employees damage, destroy, or lose property belonging to a third party.
- Render property temporarily unusable, with or without damage: When the actions of you or your employees render third-party property unusable, regardless of whether or not it is physically damaged. Property damage claims can not only cover the costs associated with the categories above, but they can also provide the investigation and a legal defense for claims made by a third party.
What are some examples of property damage claims?
As we’ve seen, property damage claims can take a few different forms. Here are a few examples:
- Imagine you’re a dog trainer running agility classes for pooches of all levels. Unfortunately, one of your newer four-legged students breaks free and relieves himself on another customer’s handbag. After all the barking is over, the owner could sue you for the cost of replacement.
- Or say, for example, you’re a piano tuner with several music teachers as clients. If you damage a piano part, it could be weeks before replacement parts arrive, putting the client’s business on hold. You might have to face the music if the client sues for the cost of the parts and lost income.
If you don’t have property damage liability coverage, the liability could expose your small business to the financial impact of third-party property damage claims.
Can you protect yourself from being sued in a property damage claim?
If you’re worried about being sued, the good news is that you’ve already taken the first step to protecting yourself by reading this post so that you have a better understanding of your potential liability.
As you can see, property damage isn’t just something that construction workers or owners of rowdy nightclubs need to think about — even piano tuners and dog trainers might find themselves in a pickle if they don’t have the right coverage.
To avoid being sued for a property damage claim, the best thing you can do is to avoid any accidents from occurring in the first place. Make sure you and your employees are fully trained on how to minimize the risks in your profession. And take care to properly handle and safely store all of your tools and equipment to avoid mishaps involving a third party’s property.
Thankfully, you can run your business with more confidence when you purchase general liability insurance, knowing you have protection for property damage claims.
What does general liability insurance cover?
General liability insurance is often considered the most essential business insurance. It protects you against the risk of third-party liability arising out of accidents causing property damage.
If an accident occurs, it also protects against you having to pay for the third-party bodily injury claims. For example, if your customer trips over your ladder and breaks her arm, general liability insurance may cover the medical costs associated with your customer’s injury.
Also, in the event you are sued by a third party, general liability coverage also provides the investigation and legal defense for claims made under the policy.
What’s not covered by general liability insurance?
While general liability insurance can help with many types of claims, it’s not a bulletproof shield. For one, general liability insurance does not cover first-party damage or, in other words, damage to the property of the Named Insured (i.e., the first party). It only covers third-party damage.
A third party is a person or entity who is not the Named Insured or another insured covered under the insurance policy.
Generally, the following things are also not covered by general liability insurance:
- Damage or loss to intangible property, such as electronic records
- Vehicles, even if you only use them for your business
- Professional errors and omissions
- Incidents that occur outside the policy period
- Damage to your employees’ property
- Claimed damages in excess of the policy maximum limits
If you want coverage for any of these scenarios, you may need another type of insurance. For instance, commercial property insurance can help cover your business’ assets and equipment, and a commercial auto insurance policy can cover your vehicle. You might also consider umbrella insurance, which is designed to add additional liability coverage over and above an existing policy’s maximum limit.
How to submit a property damage claim
When submitting a claim, speed and accuracy are paramount. You should submit the claim as soon as possible while the incident is fresh in your mind.
What do you need to submit a property damage insurance claim? We’re glad you asked. Here’s the list:
- The name of the policyholder (your name or your business’s name)
- Your contact info (name, email, and phone number)
- The policy number
- The claimant’s name (the third party who suffered property damage)
- The date and location of the incident
- A description of the incident, including any witnesses
- Where the damaged property is now, if you have that information
During this process, it’s important not to claim responsibility for the incident. Also, don’t share information with anyone other than your insurance representative and law enforcement agents.
Thimble: Property damage protection you can count on
Property damage liability can have a big impact on a small business. If you’re not covered, a claim won’t just wreak havoc on your company and reputation — you might have to foot legal fees and payouts from your own pocket.
That is, unless you have general liability insurance. At Thimble, we offer flexible, affordable, on-demand insurance to meet the needs of your small business. Whether you need coverage by the hour, day, or month, our insurance works when you do.
You can go from zero defense to tailor-made property damage coverage in under 60 seconds. It starts with an insurance quote and ends with you feeling happy that Thimble is looking out for you.