According to a five-year data analysis of liability and property policies, theft and burglary claims had an impact on about 20 percent of small businesses. However, they ranked lowest on the list of most costly claims. The average cost of a claim was about $8,000. Reputation harm cases averaged about $50,000 each.
When a reputation harm case is covered with general liability insurance, it may cost more than when there is a lawsuit involved. To be exact, general liability claims may cost more than $75,000 for defense and settlement costs when a lawsuit is involved. Researchers from Hartford said that about 35 percent of general liability claims end up in a lawsuit. Claims for fires rated in the top five list for both the most costly and the most common claims. For fire claims, the average cost was about $35,000. During the past five years, about 10 percent of small businesses were affected by fires.
The following lists include the most costly and the most common claims.
Most Common
- Burglary and theft
- Water and frost damage
- Wind and hail
- Fires
- Slips and falls
- Customer injuries and damages
- Product liability
- Hit by object
- Reputation harm
- Auto accident
Most Costly
- Reputation harm
- Vehicle accident
- Fires
- Product liability
- Customer injuries and damages
- Wind and hail
- Slips and falls
- Water or freezing damage
- Hit by object
- Burglary and theft
Small business owners can avoid these claims with some simple changes in operations and by following basic safety precautions. From the data the Hartford collected, researchers recommended the following tips for small businesses.
Burglary And Theft
Always conduct background checks on employees to prevent workplace theft. Make sure the business has controlled entryways and that codes or keys are provided only to trusted workers. If there are no fences around the property, have iron fences and sliding gates installed. It is also smart to enclose parking areas for better protection from vehicle break-ins. Make sure the lighting indoors and outdoors is adequate.
Reputation Harm
Do not criticize competitors in front of customers or through public media channels. When posting photos or content on a site, be sure the copy and photos are not copyrighted.
Damage From Water Or Freezing
Make sure indoor temperatures are adequate when the temperatures outdoors are below freezing. This is important to do even when the business is vacant. Pipes often freeze and burst when the temperatures are too cold. When the building is vacant during colder months, leave the water faucets turned on to just a slight drip or trickle in addition to keeping temperatures reasonable. Make sure key persons on every shift know where the water shut-off valves are located.
Fires
Update a fire emergency and evacuation plan every year. Plan evacuation routes carefully and make sure they are posted in areas where all employees will see them. Conduct fire drills frequently to test employees’ preparedness and knowledge. Test smoke detectors and carbon monoxide detectors frequently in accordance with fire codes.
Wind And Hail
Maintain trees and treat them regularly. Make sure windows are protected from flying debris. If there are objects outdoors that could be dangerous when there are high winds, move them indoors. Any equipment that could be moved or become dangerous when there are high winds should be anchored outdoors.
Auto Accidents
When trusting company vehicles to employees, research their driving records first. Never offer incentives for faster delivery times.
For more safety tips, discuss concerns with an Enterprise Agent.
