Small businesses face a number of challenges and obstacles each year. Sometimes, those challenges require the business to file an insurance claim. Four out of 10 small businesses will likely face a property or general liability claim in the next decade, according to a review of The Hartford’s small business claims.
1. Burglary and Theft
Burglary and theft account for about 20% of all small business claims, and this costs businesses $8,000 per claim.
Small businesses can help minimize the risk of theft by:
- Conducting background checks when hiring employees
- Installing surveillance systems
- Adding fencing
- Installing sufficient exterior and interior lighting
There’s no surefire way to prevent theft and burglary, but implementing adequate security measures can help greatly reduce the risk.
The cost of a theft claim may not be substantial, but if several thefts occur over a short period of time, these claims could easily bankrupt a business.
2. Fire Damage
Fire claims are one of the most common and costliest claims among small businesses. They account for 10% of claims, and cost $35,000 on average.
Businesses can help prevent fires by:
- Testing all fire detection and suppression equipment
- Ensuring your building meets local and national fire codes.
- Establishing an emergency preparedness plan, which includes fire evacuation routes
Fire damage is costly, but cleaning up the damage also takes a great deal of time.
3. Customer Slip and Fall/Injury
Businesses have a duty to ensure that their properties are in reasonable repair and must also warn visitors and occupants of dangerous conditions. Failure to warn of dangerous conditions or neglecting a dangerous condition could lead to a slip and fall injury.
Customer injury and damages can cost businesses thousands of dollars.
- Customer slips and falls account for 10% of claims and costs $20,000 on average.
- Customer damage and injury account for less than 5% of claims and costs $30,000 on average.
- Product liability accounts for less than 5% of claims and costs $35,000 on average.
Customer injury and damages can have a ripple effect, damaging a company’s reputation along the way. The same effect can occur with a product liability claim.
When customers lose trust in a business, it can be difficult for the company to keep its doors open.
4. Vehicle Accidents
Some small businesses have company vehicles and require employees to travel as part of their scope of employment. These businesses have to worry about the risk of vehicle accident claims.
Vehicle accident claims account for less than 5% of claims, but they cost $45,000 on average.
Businesses can reduce the risk of these claims by:
- Screening employee driving records before allowing them to drive a company vehicle.
- Not providing incentives for speedy deliveries.
- Investing in defensive driver training for employees.
Not every small business has to worry about vehicle accident claims, but those that do face great financial risk.
5. Reputational Harm
Reputational harm claims are among the costliest for small businesses, although they account for only a small percentage of claims (less than 5%). On average, a reputational harm claim costs a small business $50,000.
If a lawsuit is involved, the cost of a claim can be much higher, averaging $75,000 or more per case.