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Businesses need commercial insurance. It is a fact that this coverage will protect you and your commercial bottom line. That will become critical in case a third party challenges you for harm you cause them. The coverage that applies to such losses is liability insurance. It usually has a lot of ins and outs,commercial property but often contains a section of coverage for property damage. What is this coverage? Why does your business need it?

There is always a chance you could harm someone else or their belongings through their business. Therefore, the wise business insurance holder should ensure their policy covers property damage.

How does property damage insurance work?

In the course of business, you will interact with customers. During these interactions, the chance will always exist that you could harm them. Your liability insurance can step in to help when these accidental damages occur.

Liability insurance applies strictly to the damage you might cause to third parties. Such mistakes might cost a third party a lot of money. Therefore, they might want to you to pay up to cover the damage. It was your fault, after all. The liability insurance might help you compensate the claimant for these losses. Furthermore, it might help you settle lawsuits and other legal settlements that might result.

Property damage liability coverage applies specifically to the property damage you cause your customer. For example, let’s say that you own a house cleaning business. You travel to other peoples’ homes to work. One day, while working, you accidentally cause a fire because you leave the iron down on the board. The fire might ruin the appliances, damage clothes and furniture, and scorch the paint. The client will likely expect you to cover the repairs and replacement of damaged items.

In such a scenario, your property damage liability insurance will likely come into play. It can cover many of the losses related to this fire. Therefore, the client won’t face personal losses for the damage. Likewise, your business might avoid the risk of having to pay for such damage out of pocket.

Your property damage liability insurance might also apply to situations in which you have a client’s property in your care. For example, if you refinish furniture and damage an item, this policy might cover this loss as well.

However, talk to your agent about the appropriate way to set up your property damage liability coverage. Many businesses carry limits in excess of $1 million. However, the exact amount of protection you need will vary. Furthermore, you’ll also need to ensure that the policy accurately addresses the services you provide. Therefore, you’ll face less of a risk of scenarios in which a policy might not apply.

Also Read: How Do Public Entities Minimize Property Risk?

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