Top 10 Small Business Claims

“4 out of 10 small businesses are likely to experience a property or general liability claim in the next 10 years.” 

This is what The Hartford’s small business claims department discovered after analzying 5 years of data from over 1 million property and liablility policies.

On the top of that list for the most common claim is burglary and theft. However, the most costly claim for a small business is reputational harm – including slander, libel, and violation of privacy.

It would seem that an unexpected event happens more often than many small business owners realize. The Hartford went on to identify the most common claims as well as the most costly. Burglary and theft affected 20 percent of small business owners in the past 5 years. However, burglary and theft ranked lowest of the top 10 most costly claims, averaging $8,000, comparted to reputational harm claims, which cost $50,000 on average.

What’s worse is that a claim payout on a reputational harm claim, covered through a general liability policy, can run even higher if a lawsuit is involved, according to The Hartford. If a lawsuit comes into play, the claim payout can average more than $75,000 per case to defend and settle. According to their claims history and analysis, roughly 35% of all general liability claims result in a lawsuit.

Fire is another big cause of loss. More so than probably realized. It ranked on both the most common (10% of business owners in the past 5 years) and the costliest ($35,000 on average).

The bottom line is, these things happen everyday to unsuspecting business owners. Make sure  your insurance and risk management is in order protecting you against  your exposures. Work with us and your team to help mitigate your risk by shoring up areas where the most common losses could occur. Obviously you can’t do much about Mother Nature, but you can install a security system, review and update your quality control processes and standard operating procedures, maintain entrances and exits insuring they are safe and clear, etc.

Here is the complete list of the top 10 property and liability claims:

Most Common (percent of small business claims):

1. Burglary & Theft (20%)
2. Water & Freezing Damage (15%)
3. Fire (10%)
4. Wind & Hail Damage (15%)
5. Customer Slip & Fall (10%)
6. Customer Injury & Damage (less than 5%)
7. Product Liability (less than 5%)
8. Struck by Object (less than 5%)
9. Reputational Harm (less than 5%)
10. Vehicle Accident (less than 5%)

Most Costly (average cost per claim):

1. Reputational Harm ($50,000)
2. Vehicle Accident ($45,000)
3. Fire ($35,000)
4. Product Liability ($35,000)
5. Customer Injury or Damage ($30,000)
6. Wind & Hail Damage ($26,000)
7. Customer Slip & Fall ($20,000)
8. Water & Freezing Damage ($17,000)
9. Struck by Object ($10,000)
10. Burglary & Theft ($8,000)