Does General Liability Insurance Pay for Client Property Damage?
When you buy your business insurance, you will likely need to invest in liability coverage. A general liability policy is among the foundations of coverage you might need. It can apply to some of the most frequent liability incidents that your business might initiate. One of the common types of coverage this policy provides is property damage liability insurance. It pays when you have to pay someone else for damage to their belongings. Here’s how you can use it to your advantage.
When insuring yourself against property damage liabilities, make sure your policy not only contains standard property damage insurance but also products/completed operations coverage.
What is liability insurance?
As a business owner, you want your services and operations to go off without a hitch. However, there’s no guarantee that they will. If something goes wrong, in any capacity, then it might cause harm not only to the business but also to other people, even clients or strangers.
Liability is one party’s responsibility for something else. It stands to reason, therefore, that when a business is responsible for someone else’s losses, then the business might have to pay that person for their losses. Liability insurance is the portion of your business’s commercial insurance portfolio that will help pay for such costs.
You might be responsible for harm to someone else even when you didn’t intend for a problem to occur. Just because an accident might be an accident, that doesn’t mean you won’t have to pay for the potential ramifications. That’s why it is important that you have a liability insurance policy. You never know when you might need to file a claim.
How does it cover property damage?
It takes a number of liability insurance policies to fully insure businesses. However, the starting point is a commercial general liability insurance policy. Most of the time, the policy will include a component for property damage liabilities. That means, if your business is responsible for causing property damage to someone else’s belongings, then your policy can help you pay for the costs of your recovery.
Suppose that you run a jewelry store where you make repairs and clean special items. One day, a client brings in an exquisite set of heirloom pearls in a necklace. Your job is to clean the necklace and repair a clasp. However, while trying to undertake this task, the band snaps, spilling pearls everywhere. Unfortunately, some of them are total losses when they roll down an air conditioning vent.
The necklace snapped on your watch, and because you lost some of the pearls, that’s considerable value lost for your customer. Therefore, you might have to compensate them for the damage done to their property. Liability insurance might be your saving grace, as long as you have the appropriate limits to cover an expensive asset such as jewelry.
However, if someone were to throw a rock through your window, you may be covered.
Expanding Your Protection
It’s important that you have the appropriate limits for the property damage liability policy you purchase. However, you also need to make sure you have a couple of additional types of coverage that might prove instrumental in certain businesses.
Check with your agent to see if your policy contains product liability and completed operations liability coverage. A product liability claim applies if you make a product, which then goes on to cause property damage or injuries to someone else. Completed-operations coverage is a bit different but applies if you provide a service, like a repair, for someone else. If that project fails, causes additional damage, and then winds up costing the client money, then the operations policy can pay.
Don’t forget, if a disgruntled client sues you because you damaged their property, then your policy can help cover your legal expenses, in many cases. Speak at length to your agent about the best way to structure your property damage liability coverage to provide your business with the best protection.
