Top 10 Small Business Insurance Claims

September 4, 2018||inBusiness Insurance|business insurance, claims, damage, lawsuits, libel, theft

Four out of 10 small businesses are likely to experience a property or general liability claim in the next 10 years, according to an analysis of The Hartford’s small business claims. Topping the list for the most common claim is burglary and theft, however, the most costly claim for a small business is reputational harm1, which includes libel, slander, and violation of privacy.

Top 10 Small Business Insurance Claims
Click here to submit an inquiry to Murphy Insurance or call us at 800 222 8711

“An unexpected event happens more often than many small business owners realize,” said Stephanie Bush, senior vice president of Small Commercial insurance at The Hartford. “It is important that a small business owner work with a local independent agent to find the right coverage to protect them at various stages of their business and minimize the impact of a potential claim.”

What The Stats Show

Based on a five-year analysis of data from more than one million property and liability policies, burglary and theft impacted 20% of small business owners in the past five years. However, burglary and theft ranked lowest out of the top 10 most costly claims, averaging $8,000, compared to reputational harm claims, which cost $50,000 on average.

A claim payout on a reputational harm claim, covered through a general liability policy, can run much higher if a lawsuit is involved. If a lawsuit is involved, a general liability claim can average more than $75,000 per case to defend and settle. Based on The Hartford’s claims history, 35% of all general liability claims result in a lawsuit.

Fire claims are ranked in the top five of both the most common and most costly claims. The average cost for a fire claim is $35,000, impacting 10% of small business owners in the past five years.

Top 10 Property & Liability Claims

most common most costly
burglary & theft (20%) reputational harm ($50,000)
water & freezing damage (15%) vehicle accident3 ($45,000)
wind & hail damage6 (15%) fire ($35,000)
fire (10%) product liability4 ($35,000)
customer slip and fall (10%) customer injury or damage5 ($30,000)
customer injury and damage (<5%) wind & hail damage ($26,000)
product liability (<5%) customer slip and fall ($20,000)
struck by object (<5%) water & freezing damage ($17,000)
reputational harm (<5%) struck by object ($10,000)
vehicle accident (<5%) burglary & theft ($8,000)

What Businesses Can Do to Protect Themselves

 “A small business owner can take steps to avoid these types of claims,” said John Kinney, chief claim officer at The Hartford. “By making simple modifications to operating procedures or following a few safety tips, a business can be better positioned to prevent accidents and property damage.”


Burglary and Theft:

  • Conduct background checks.
  • Have adequate devices installed to control unauthorized entry into your business.
  • Install fencing and gates around the building and parking areas.
  • Ensure adequate exterior and interior lighting.

Reputational Harm:

  • Avoid criticizing a competitor publicly or to customers.
  • Be sure to have permission to post photos or other content on your website to avoid copyright infringement.

Water and Freezing Damage:

  • Maintain proper indoor temperature during periods of extremely cold weather, even when away.
  • Clear roofs and overhangs of excessive snow and ice if possible.
  • Ensure that key personnel know the location of water shut-off valves.

Fire:

  • Establish or update an emergency preparedness plan.
  • Plan fire evacuation routes, mark them clearly and drill employees in using them.
  • Test all fire and life safety detection and suppression equipment per local and national fire codes.

Wind and Hail Damage:

  • Treat and maintain trees.
  • Protect windows from flying debris.
  • Walk the grounds; move objects inside that could become projectiles in high winds.
  • Anchor any equipment stored outside that could be moved by high winds.

Vehicle Accidents:

  • Screen employee driving records before allowing them to use their car for business purposes.
  • Do not provide incentives to drivers for speedy deliveries.

Source: The Hartford

1 Reputational harm claims include financial damages from libel, slander, defaming products or services, or violating privacy.
2 The information outlined in this release is based on an analysis of five years of claims data (2010-2014) from more than one million of The Hartford Business Owner’s policies.
3 Vehicle accidents include accidents involving employees of the small business owner who use their personal vehicles for business purposes. Average costs can be higher if a lawsuit is involved.
4 Product liability insurance may apply to injury or damage arising out of the use of a covered product.
5 Customer injury and damage covers damage to the customer’s property and injury to the customer caused by the insured small business owner.
6 The wind/hail claims generally involve structural damage, primarily to roofing or signage.

Read Other Blog Posts

People celebrating

Hosting Holiday Parties Responsibly: Tips for Personal & Business Gatherings

While it’s easy to get caught up in the fun, taking some simple precautions can prevent mishaps and protect you from unexpected situations. Here are some practical tips for hosting a safe and successful holiday party, with a focus on being prepared.
Read more
Drowsy

Preventing Drowsy Driving

Every year, the National Sleep Foundation organizes Drowsy Driving Prevention Week to raise awareness about the dangers of driving while fatigued.
Read more
Flooding

Why Flood Insurance is Essential: Lessons from Hurricanes Helene and Milton

The devastating impacts of Hurricanes Helene and Milton have shown that flood risk isn’t limited to coastal areas. These storms have highlighted a crucial gap that individuals and businesses need to be aware of: flood damage is generally not included in typical home, condo, renters, or commercial property insurance, making a separate flood insurance policy essential for true protection.
Read more
Deer

Defensive Driving to Avoid Deer Collisions

With deer mating season in full swing from October through December, drivers face an increased risk of collisions. As deer are more active, especially around dawn and dusk, habitat loss has pushed them closer to roadways. Here’s how defensive driving can help you avoid an accident.
Read more
Massahusetts DIA Seal

MA Dept of Industrial Accidents New Notice Requirements

The Department of Industrial Accidents (DIA) has revised the Notice to Employees and has established new notice requirements. On or before September 16, 2024, all employers must utilize and repost the revised Notice to Employees poster.
Read more
Spam Phishing Scam

Recognize Spam and Phishing Emails

As more of our daily lives move into cyberspace, hackers, cybercriminals and spam bots may lurk behind every new message that shows up in your inbox. Even robust spam filters may not be able to catch every unwelcome email. Fortunately, you can act as an additional line of defense for yourself and your electronic devices by understanding the warning signs of spam and phishing emails.
Read more
Distracted Driving

How Distracted Driving and Texting Impact Your Auto Insurance Premiums

One major reason for auto insurance premiums going up is the rise in distracted driving, especially texting while driving. Distracted driving has become a leading cause of accidents, pushing up costs for insurance companies and, ultimately, leading to higher premiums for all drivers.
Read more
Hacker

Cyber Risk Exposure Scorecard: Assess your risk

Cyber incidents have become increasingly prevalent, impacting organizations of all sizes and industries. As these incidents continue to rise in both cost and frequency, organizations must take steps to address their cyber exposures and bolster their digital security defenses.
Read more
Shipping dock

Exposing Double Brokering: Safeguarding Your Freight Against Deceptive Schemes

In the landscape of global commerce, the logistics industry serves as the backbone ensuring that goods reach their destinations efficiently. Yet, amidst the complexities of this intricate network lies a threat known as double brokering, a freight fraud scheme that can leave companies vulnerable to financial loss and operational disruption.
Read more

Visit Our Business Insurance Page

Business Insurance

Murphy Insurance stands as your steadfast partner in safeguarding your business from unforeseen challenges in today’s dynamic business landscape. In an era where comprehensive business insurance is not just a prudent choice but a vital one for ensuring the long-term stability and security of your enterprise, we are here to offer our expertise. Running a business inherently entails various risks that can potentially impact your financial stability and reputation. Learn more about our comprehensive business insurance solutions, which are meticulously designed to protect you from these potential threats, granting you peace of mind necessary to focus on the growth and prosperity of your business.