Property Damage
Physical injury to or destruction of tangible property, including the loss of use of that property. In a liability context, refers to damage a contractor causes to someone else's property.
Property damage is physical injury to tangible property, and the loss of use that follows. It is the central concept in almost every property insurance claim, and it has a specific meaning that governs what the carrier covers.
Physical Damage vs Loss of Use
Property damage has two components. Physical damage is the direct harm to the structure and contents — charred studs, wet drywall, hail-pitted shingles. Loss of use is the economic consequence of not being able to use the property while repairs happen — hotel bills, meals out, additional transportation, or lost business income for commercial owners. Both are covered under a standard property policy, though each has its own limit and conditions.
First-Party vs Third-Party
A first-party property damage claim is one the insured files under their own policy for damage to their own property. A third-party claim is filed against someone else's liability policy because they caused the damage. A contractor whose ladder falls through a homeowner's window creates a third-party exposure on the contractor's general liability policy. A tree falling on the insured's own roof is a first-party claim on the homeowners policy.
Cause of Loss Drives Coverage
Whether property damage is covered depends on the cause. Named peril policies list the perils covered; all-risk or open-peril policies cover anything not specifically excluded. Flood, earth movement, and certain wear-and-tear conditions are commonly excluded and require separate coverage. Understanding which perils apply to a given loss is the first step in any claim analysis.
Frequently asked questions
Property damage includes physical damage to a building, fixtures, landscaping, personal contents, and any loss of use resulting from that damage. The damage must be tangible, not purely economic, and must be caused by a covered peril under the policy.
Most property policies include loss of use coverage, also called additional living expenses for homeowners and business income for commercial policies. This covers the policyholder's inability to use the property while repairs are made, up to specified limits and time frames.
It depends on the cause. Damage from a covered peril like fire or wind is typically a first-party claim on the owner's policy. Damage the contractor causes through negligence is typically covered under the contractor's general liability. Builders risk covers damage to the structure under construction before the owner takes possession.
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