As a small business owner, the last thing you want is to damage a client or third party’s property. However, no matter how careful you are in the course of conducting business, there’s always the chance that something will go wrong.

What’s more, property damage has a much broader legal definition than you may realize. First of all, it can extend past damage caused and into property loss. In addition, you can be held liable if your actions lead directly or indirectly to someone losing the use of their property. That’s why it’s important to have a specific type of insurance that protects your company from the expensive claims that can result from property loss or damage. 

If you’re looking for a property damage liability definition, you’re in the right place. Let’s do this. 

What counts as property damage?

When you think of property damage, you might imagine incidents where someone damages an item they’ve been entrusted to alter or repair. However, property damage doesn’t have to result in damage at all. To get a better sense of this definition, think of all the ways someone can do harm to a piece of physical property (and in extension, to a business). They could:

  • Lose a piece of tangible property
  • Damage or destroy a piece of tangible property
  • Render property temporarily unusable through damage
  • Render property temporarily unusable without damage

As you can see, accidents, mistakes, and sheer bad luck could all leave you liable for property damage, hence the importance of having an insurance plan with comprehensive coverage for protection against a variety of situations that could occur.

Property damage examples

Since there are several actions that fall under the property damage liability definition, it can be helpful to look at some examples of the damage in action. Here are a few scenarios showing the scope of property damage:

  • Loss of tangible property: You’re an upholster. Clients entrust you with their prized furniture. Should a piece go missing, its owner could hold you responsible.
  • Damage to tangible property: You’re a dog trainer whose open-level sessions welcome pooches of all levels. Should this practice lead to an accident on a client’s leather backpack, they could sue you for the cost of its replacement.
  • Rendering property unusable through damage: You’re a piano tuner who has several music teachers as clients. Should you damage a part of a piano, making it unusable for weeks until replacement parts arrive, you could be held responsible for the cost of the parts as well as lost revenue from piano lessons.
  • Rendering property unusable without damage: You’re a debris removal professional who specializes in hazardous waste. Should an accident lead you to spill on the street, causing a nearby business to close its doors during the clean-up, you could be held liable for loss of use of their commercial property even though you didn’t damage it directly.

Without property damage liability coverage, your small business is exposed to an unexpected property damage claim. 

How can you protect yourself?

The first step to protecting yourself is understanding how these laws might affect you in your line of work. 

Whether you’re a contractor or a tutor, you might damage a client’s property in the course of your work. And even if an error doesn’t damage someone’s property at all, it could still make it unusable for a period of time.

Hopefully, you now see how important insurance is when it comes to protecting your business from claims of property damage. When you take out a general liability insurance policy, you can conduct business knowing you’re protected in the case of property damage and beyond.

What does general liability insurance cover?

General liability insurance provides coverage in the face of client and third-party claims of property damage, bodily injury, and medical costs.

As you can see, the costs associated with property damage can extend beyond the property itself and into a client or third party’s lost wages (as a result of that damage). Additionally, in some cases, you could end up in court thanks to the mishap.

Imagine you’re a carpet cleaner. Should a client sue you for damaging an expensive rug, you could end up responsible for your legal fees while the case goes to court. In some cases, legal costs can be more than the damaged property itself. 

General liability insurance coverage can help cover these fees and any payouts to injured parties. Beyond that, it can prove useful if you rent out commercial space, or rent a booth at a conference or expo. Many property managers and event organizers will want to see a Certificate of Insurance before accepting your application.

What’s not covered by general liability insurance?

While general liability insurance can help with many types of claims, it is not a catch-all when it comes to your business’ liability. There are specific coverages and policy limits.

It’s always important to talk to your insurer to make sure you fully understand your policy terms and coverage limits. However, in general, the following things are not covered: 

  • Your personal property and business property
  • Vehicles, even if you use them just for your business
  • Professional errors and omissions 
  • Damage or loss to intangible property (i.e. data)
  • Incidents that occur outside the policy period
  • Damage to your employees’ property
  • Known claims originating before the start of policy

If you’re looking to cover yourself in some of these scenarios, you may need another type of insurance. For example, commercial property insurance can help cover your business’ assets and equipment, while you can take out an auto insurance policy to cover your vehicle. In addition, professional liability insurance covers professional errors and omissions.

How to submit a general liability claim

The most important part of submitting a claim is to do it as soon as possible and with all the information needed. In general, to submit a property damage insurance claim, you’ll need:

  • The name of the policy holder (your name or your business’s name)
  • Your contact info (name, email, and phone number)
  • The policy number
  • The claimant’s name (the person or party who suffered property damage)
  • Date and location of the incident
  • Description of the incident including any witnesses
  • Where the damaged property is now if you have that information

You should receive your claim immediately once your information has been verified. During this process, it’s important not to claim responsibility for the incident. In addition, don’t share information with anyone besides insurance representatives and law enforcement agents.

Property damage liability can affect your small business’ bottom line. Make sure you have a general liability insurance policy that fits your needs. 

Proper property damage protection

If you’re in the market for a general liability policy, we offer on-demand, flexible, and affordable insurance. Our insurance works when you do. That’s why you can choose a coverage length by the  hour, day, or month. 

In under a minute, you can go from having no defense against property damage to having a Certificate of Insurance in your hand (in case life decides to throw you some lemons). Download the Thimble app or click “select a quote,” input a few quick details about your business, and we’ll give you a free quote.

If you’re concerned about causing property damage in your line of work, let’s squash those worries and get you insured. That’s Thimble. The 21st generation way of getting insurance—right on your phone, and in a matter of seconds. 

Written on March 30, 2020 | Modified on: August 23, 2021

Our editorial content is intended for informational purposes only and is not written by a licensed insurance agent. Terms and conditions for rate and coverage may vary by class of business and state.