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Are You Covered if You Accidentally Damage Your Customer's Property?

For a majority of small businesses that provide services at a customer’s residence (electricians, plumbers, painters, etc.), accidents sometimes happen when property is being moved in order to perform the work the business was hired to do. For example, the painting contractor needs to move a table in order to gain access to a wall they are painting. In the process of moving the table, a decorative vase that was on the table is broken beyond repair. Under the standard business owner’s liability coverage, damage to the vase would not be covered. Let’s take a closer look at general liability coverage language.


Business liability policies begin with an “Insuring Agreement” that outlines what the insurance carrier agrees to pay and generally reads something like this:

Insuring Agreement

We will pay those sums that the insured becomes legally obligated to pay as damages because of “bodily injury” or “property damage” to which this insurance applies………

This insurance applies to “bodily injury” and “property damage” only if:

  1. The "bodily injury" or "property damage" is caused by an "occurrence" that takes place in the "coverage territory";
  2. The "bodily injury" or "property damage" occurs during the policy period; and
  3. Prior to the policy period, no insured and no "employee" knew that the "bodily injury" or "property damage" had occurred.......

The central provision of a general business liability policy is that damages are caused by an “occurrence.”  Simply put, an occurrence is generally defined as an accident or continuous repeated exposure which results in bodily injury or property damage neither expected nor intended by the insured.

A contractor accidentally dropping a vase would certainly trigger the definition of an “occurrence” under a general liability policy. However, the Exclusions section of an insurance policy will outline limitations to the coverage provided. For this example, there is a specific exclusion that removes “property damage” coverage for certain property.  Two general exclusions that apply in this situation are:

  • Personal property in the care, custody or control of the insured;
  • That particular part of any property that must be restored, repaired or replaced because "your work" was incorrectly performed on it.

The vase is personal property that was in the care, custody and control of the business’ employee at the time it was broken. Additionally, moving personal property is often inherent to the work that a painter is hired to do in preparation for painting, so breaking the vase would be considered performing part of their work incorrectly. This is a common occurrence for which coverage does not apply under basic business liability policies.

Businesses often find themselves in situations where they accidentally damage their own work or the work is not completed to the customer’s satisfaction:

  • Scratch a floor that is being installed
  • Dent a refrigerator that is being moved
  • Installation of material is not done according to proper specifications and the customer is dissatisfied

Most companies offer additional coverage designed to protect a business owner from just these situations. Integrity Insurance offers an endorsement entitled Property of Others in the Care, Custody or Control of the Insured. As the title suggests, this endorsement provides a limited amount of coverage for property belonging to others while that property is in the care, custody or control of the insured and loss to that property arises out of the insured’s business operations.

If you are in the business of handling your customer’s property and are not sure if you have the coverage you need for common accidents, contact your independent insurance agent to discuss the what exposures you have and the insurance available to cover those risks.

To review your insurance coverage or to talk to someone about insuring your business, contact us at Southern Insurance Associates at Info [at] SouthernInsuranceAssociates [dot] com or 706-996-8788.

Source: TrustedChoice