Bodily injury and property damage in insurance explained

Bodily Injury and Property Damage Liability Explained

Business Insurance

 

Key takeaways

  • Bodily injury liability is the legal responsiblity for physical harm, illness, or death of another person
  • Property damage liability is the legal responsiblity for the destruction of or harm to someone else’s physical property
  • There are numerous liability insurance covers available to safeguard against compensation claims for bodily injury and property damage


In the context of insurance and legal liability, bodily injury and property damage are terms that are frequently used. Both are associated with legal claims and can be covered under various forms of liability insurance, such as public liability, product liability, and employers’ liability. Whilst less commonly under professional indemnity and cyber liability.

The below article will take a closer look at what bodily injury and property damage mean, the types of liability claims, and what insurance covers can protect against the financial consequences.


What is bodily injury?

Bodily injury means physical harm, illness, or death that a person sustains as a result of someone else's fault. This can include anything from minor scrapes and bruises to severe injuries like broken bones, or long-term disabilities. In the context of insurance, bodily injury liability refers to the legal responsibility for causing harm to another person.

 

Bodily injury examples:

•  A customer trips over a loose cable and breaks their arm
•  A contractor accidentally injures a pedestrian whilst on a building site
•  A faulty product causes burns and an allergic reaction

 

Compensation claims may include: medical expenses, rehabilitation, loss of earnings, long-term care, and legal expenses. The aim is to restore the injured party, as much as possible, to the position they were in before the injury occurred.

Damages awarded for liability liability can also include compensation for the physical pain, suffering, and loss of amenity. Claims involving severe injuries, such as broken bones, head injuries, or long-term disabilities, can result in high compensation payouts.


What is property damage?

Property damage means the destruction of or harm to someone else’s physical property. This could include buildings, vehicles, equipment, or other possessions. In the context of insurance, like bodily injury, if your actions (or the actions of your employees) cause damage to third-party property, you may be legally liable for repair or replacement costs.

 

Property damage examples:

•  A fire spreads to a neighbouring business property
•  A builder accidentally floods a client’s kitchen
•  A faulty product causes damage to a client's machinary

 

A claim for property damage may include cost of repair, replacement, compensation for loss of use, and potential clean-up costs. Property damage liability claims are more common in industries involving physical work, transportation, or site visits.


How liability insurance covers bodily injury and property damage?

Most businesses and professionals rely on insurance policies to cover their exposure to bodily injury and property damage claims. These policies vary depending on the type of business, industry, and specific risks involved.


1. Public liability insurance

Public liability is the most common policy covering both bodily injury and property damage to third parties. This includes clients, visitors, members of the public, and other non-employees (such as bona-fide subcontractors) who may come into contact with your business activities.

It does not cover injury to your employees or damage to your own property, but will provide your business with protection for the actions of your employees. It is commonly accepted it is an important protection for any business that interacts with members of the public (including bona-fide subcontractors).


2. Employers’ liability insurance

This covers bodily injury or illness suffered by your employees as a result of their work. In the UK, employers’ liability insurance is a legal requirement for most businesses with staff. This type of insurance is essential for protecting businesses against costly legal actions, compensation awards, and medical expenses when staff are harmed in the course of their employment.

Common claims under employers’ liability insurance include slips, trips, and falls in the workplace, injuries caused by faulty machinery, repetitive strain injuries, or illnesses linked to hazardous substances.


3. Product liability insurance

Product liability protects businesses against claims of bodily injury or property damage caused by products they manufacture, supply, or sell.

Even if your business is not directly responsible for a product fault, such as when importing goods from overseas or selling under your own brand, you may still be held legally liable under UK consumer protection laws. This cover is especially important for retailers, wholesalers, manufacturers, and ecommerce businesses.


4. Professional indemnity insurance

Professional indemnity protects businesses and professionals against claims of negligence, errors, or omissions that result in a client’s financial loss. While the core cover is designed to cover financial losses, such as breach of contract, cost overruns, or breach of professional duty, extension are sometimes available to cover contingent bodily injury or property damage arising indirectly from a professional’s act, error or omission.

This is particularly relevant in industries like architecture, engineering, and surveying, where design, advice or specifications can lead to consequential losses that include bodily injury or property damage. For example, an engineer’s incorrect calculations may lead to structural failure, injuring individuals and damaging property.

Contingent bodily injury and property damage cover can bridge the gap between professional liability and traditional public liability insurance. It’s important to note that most professional indemnity policies do not include this extension, so working with a specialist broker is essential to ensure your cover reflects your risk profile and industry exposure.


5. Cyber liability insurance

While cyber insurance is primarily associated with data breaches, ransomware attacks, and privacy violations, it can also offer protection against contingent bodily injury and property damage caused by cyber events.

Where software controls critical systems, such as machinery or infrastructure, the potential fallout from a cyberattack can result in physical consequences. For example, a manufacturer’s network could cause robotic equipment to malfunction, which then causes employees bodily injury or damage to customer's property.


6. Directors & officers liability Insurance

More commonly known as D&O insurance, the cover can provide financial protection for company directors, senior managers, and officers against claims of wrongful acts made while carrying out their duties.

While D&O insurance will typically exclude bodily injury or property damage, cover can be carved back for a where the board is alleged to have failed in their supervisory responsibilities, which contributes to the incidents that causes the bodily injury or property loss. Please note that D&O insurance is not a substitute for public, product, or employers’ liability cover, but complements a business’s overall risk management strategy.


7. Commercial combined insurance

This is a comprehensive policy that combines various forms of cover under one package, often including public liability, products liability, employers’ liability, property insurance, and other business insurance. 

Commercial combined is a solution works for SMEs such as wholesalers, manufacturers, warehouses, and retailers and helps ensure both bodily injury and property damage liabilities are addressed under a single policy.

 



 

About the author

Simon Taylor is a respected senior industry professional and a Chartered Insurance Broker with over 20 years’ of experience in the commercial insurance sector as an underwriter, broker and director.