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When you are hired to conduct business on a client location, what happens when you unintentionally damage someone else’s property? After all, accidents are simply out of our control. The addition of Voluntary Property Damage coverage to your policy can fill the gap in your general liability coverage and financially protect your business from unforeseen accidents.
What is Voluntary Property Damage Coverage?
Voluntary Property Damage provides coverage for unintentional damage to the real property of others while that property is under your care, custody, or control. Often added as an endorsement to general liability insurance policies, Voluntary Property Damage is particularly important for businesses that interact with customer property or provide services at a customer’s home or office. It is important to note that the damage caused to third-party property must be due to your business services.
A standard general liability insurance policy includes property damage coverage, which will provide funds if you or one of your employees causes property damage to another person or company’s property. However, general liability policies usually have a specific exclusion for property that is temporarily in your care, custody, or control. This is where Voluntary Property Damage comes into play.
Example:
- Your carpet cleaning business is hired to deep clean the carpet of a client’s offices. One of your employees accidentally trips and breaks a glass wall divider. Although the wall is not part of the property you were hired to work on, it was still under your care, custody, or control when it was damaged. Your Voluntary Property Damage endorsement would provide funds to repair the damaged property.
Who needs Voluntary Property Damage coverage?
Voluntary Property Damage is especially important for contractors and cleaning services that must travel to various client locations to conduct business. When you are conducting business on third-party property, that property can often be seen as under your care, custody, or control. Voluntary Property Damage would financially protect your business should you or an employee unintentionally damage third-party property due to your business operations.
Common businesses that are at risk of damaging property under their care, custody, or control include:
- Appliance repair services
- Carpenters
- Carpet cleaning
- Demolition services
- Electricians
- Flooring services
- General contractors
- Gutter cleaning
- Handymen
- House cleaning
- Janitorial services
- Landscapers
- Painters
- Pest control services
- Plumbers
- Pool cleaning
- Window cleaning
Example:
- While a plumber is installing a new toilet into a home, he accidentally drops the porcelain toilet and damages the bathroom floor. Because the bathroom was under his care, custody, or control when the floor was damaged, his insurer would pay the costs to repair the floor.
What does Voluntary Property Damage exclude?
Voluntary Property Damage does not cover:
- Damage that is already covered by another policy, such as your standard general liability policy
- Damage that is caused intentionally
- Damage to any property that you or one of your employees owns or rents
Example:
- Your business is hired to paint the outside of a home, and one of your employees breaks a window during the job. It is later discovered that the homeowner was rude to your employee so he intentionally damaged the window to retaliate. Because intentional damage is an exclusion, this incident would not be covered.
Voluntary Property Damage vs. Bailee’s Customer Insurance
Although both Voluntary Property Damage and bailee’s customer insurance cover property that is under your care, custody, or control, there are differences that distinguish the two forms of coverage.
Bailee’s customer coverage specifically covers your business if you must take possession of third-party property. For instance, an auto repair shop may keep a car overnight, a jeweler may keep a ring to resize it, or a gym with lockers temporarily stores a member’s personal belongings. In these instances, the third-party property is under your care, custody, or control, so bailee’s insurance coverage could help protect you from the risks of damage or loss to customers’ possessions.
On the other hand, Voluntary Property Damage deals with real property that is damaged during the course of your business services. You are not keeping a specific item. Instead, you are responsible for the premises and surrounding property on your job site.
Example:
- Your electronics store is in possession of customer phones for repairs. When your store is robbed, a number of customer phones are stolen. This is an example of third-party property that was taken into your possession and under your care, custody, or control during the loss. Replacements would be covered by your bailee’s customer insurance.
Final Word
When you step onto a third-party location to conduct business services, it is essential to protect your business should any mistakes or accidents occur. This is certainly the case for accidents that result in damage or loss to third-party real property. Although your general liability insurance does not cover damage to property that is under your care, custody, or control, you can fill this important coverage gap with an endorsement for Voluntary Property Damage.
