Meaning of damage in insurance
Produced in partnership with Keir Howie of 7KBW and Frederick Alliott of 7KBW

The following Insurance & Reinsurance practice note produced in partnership with Keir Howie of 7KBW and Frederick Alliott of 7KBW provides comprehensive and up to date legal information covering:

  • Meaning of damage in insurance
  • The concept of ‘damage’ in the insurance context
  • The concept of ‘loss’ as distinguished from ‘damage’
  • Judicial interpretation of ‘damage’ in insurance policies

Meaning of damage in insurance

The concept of ‘damage’ in the insurance context

The concept of ‘damage’ plays a critical role in determining the scope of cover provided by various different types of insurance. Common examples of types of insurance policy where recovery is, or can be, contingent on proving damage to property include the following:

  1. marine cargo insurance

  2. construction all risks (CAR) insurance

  3. domestic and commercial property insurance

  4. business interruption cover, especially where this is the counterpart of a traditional property policy

  5. cover for sue and labour or investigation costs under some property policies

  6. liability policies triggered by the legal liability of the insured to a third party for physical damage to their property

The precise meaning of ‘damage’ can vary, and it will always be influenced by the context in which the word appears. There is no universal definition which applies in all circumstances; as ever it is essential to construe the word in the context of the particular insurance policy in which it features. The policy may or may not contain a further bespoke definition, or failing that some other contextual indication of what ‘damage’ should be taken to mean.

In general, however, when the word ‘damage’ is used without further definition in an insurance of or relating to tangible property, it is commonly construed as referring to a change in the physical state of

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