Does general liability insurance cover property damage?

This question hides two different ones, and the answer flips depending on which you’re asking. “If I damage a client’s property, am I covered?” — yes, that’s half the reason the policy exists. “If my property is damaged, am I covered?” — no, and no endorsement to a GL policy will change that.

The property damage GL covers: damage you cause to others

The Texas Department of Insurance splits the coverage into two grants. Premises/operations coverage “pays for bodily injury or property damage that occurs on your premises or as a result of your business operations” — the cracked countertop, the paint overspray on the neighbor’s car, the water line you nick. Products/completed operations coverage “pays for bodily injury and property damage that occurs away from your business premises and is caused by your products or completed work” — the shelf that collapses a month after you installed it.

That second grant is the quiet workhorse for trades and product sellers: the claim arrives long after the invoice was paid, and it’s still a GL claim. Where the damage comes from a product you made or sold, the neighboring line matters too — see product liability vs general liability.

The property damage it never covers: your own

NEXT’s FAQ states the rule in one clause: GL helps with property damage “but only to property that does not belong to you.” Your building, your tools, your inventory, your van’s cargo — all first-party exposures, handled by commercial property insurance or a business owner’s policy that bundles the two. Buyers who discover this at claim time usually bought GL because a contract demanded it and assumed “liability” meant “everything.”

The contractor exclusions that actually bite

Two standard exclusions matter most for anyone who builds or repairs things, both documented in the TDI guide:

• Damage to your work. “Generally, CGL policies exclude coverage for property damage to your work.” Your GL policy is not a warranty — the cost of redoing your own defective work is yours. What GL pays for is the damage your defective work causes to other property: the exclusion takes the roof you botched, not the interior it let the rain destroy.
• The subcontractor exception. TDI notes an exception “for damaged work if a subcontractor working for you caused the damage” — one of several reasons GC-and-sub insurance arrangements deserve their own reading: does contractor insurance cover subcontractors.
• Damage to your product. Parallel rule for goods: the policy doesn’t cover damage to your product arising out of the product itself.

Questions people actually ask

Does E&O insurance cover property damage? No — physical damage to things belongs to general liability. E&O answers for financial loss caused by your professional work. The full boundary is here: general liability vs professional liability.

Does a commercial umbrella policy cover property damage? It extends your liability limits for damage you cause to others, sitting above the GL policy. It adds nothing for damage to your own property — an umbrella is liability coverage all the way up.

Does general liability insurance cover subcontractors? Partially and indirectly — the your-work exclusion carves an exception for damage a subcontractor causes to your completed work, but a sub’s own liability to third parties is their policy’s job, not yours.

Sources are linked below. Exclusion language follows the Texas Department of Insurance’s consumer guide to the standard CGL form; policies vary, so confirm your own form’s wording.