What does property damage insurance cover?

Property damage insurance specifically covers direct damages to property, which refers to the financial loss resulting from physical damage to or loss of tangible assets like buildings, vehicles, equipment, and personal belongings. This type of insurance is designed to restore or compensate the insured for the cost of repairing or replacing damaged property following an incident, such as a fire, theft, vandalism, or natural disaster.

In contrast, other types of insurance or coverage are required for different kinds of losses. For example, loss of profits from a business interruption falls under business interruption insurance, which compensates for income lost due to a temporary closure of the business. Physical injuries to a person are typically covered under liability insurance or health insurance, as these policies focus on medical expenses and personal injury claims. Emotional distress resulting from an accident may be addressed in personal injury claims or specific liability coverages, but it is not included in property damage insurance coverage, which is strictly focused on tangible property.