You buy Commercial Liability insurance to help protect yourself against regularly occurring events that might strike your business. A client slipping on your steps, an accident involving your vehicle or equipment – these are the types of accidents you hope to avoid and for which insurance can help cushion the blow if the worst happens.
However, your business also operates under certain assumptions; for example, that your work will be done correctly and your products will perform as expected. If either of these is untrue, you’ll create unhappy customers who will either want their money back or seek remedial action. Even though you haven’t injured or damaged their property, they’re just plain unhappy with your business.
Your Liability policy refers to such situations as “impaired property claims” and does not cover them.
For example, if an air conditioning repair service claimed to have finished its task for a client but mistakenly used the wrong part, the client might demand that the contractor come back and do the job right. If there’s no injury beyond the contractor failing to fulfill the original agreement, and everything can be put right by replacing the wrong part with the correct one, the air conditioner would be considered “impaired property” – and a Liability policy wouldn’t pay the additional costs of redoing the repair.
On the other hand, if the faulty part had damaged the air conditioner or dwelling (perhaps shorting out and starting a fire), Liability insurance would cover the resulting property damage claim.
Situations like this reinforce the need to provide ongoing risk management and skills training for your employees. For more information on protecting your business from loss, give us a call.