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What Small Business Owners Need to Know about Common and Costly Claims

According to the Hartford’s liability claims, 40% of small businesses are likely to experience at least one general liability or property claim within a 10 year period. For small businesses, the most common claims are burglary and theft and the costliest is reputation harm. Unexpected events happen more often than most small business owners realize.

Research gathered from a five-year data analysis of liability and property policies showed theft and burglary claims had an impact on roughly 20% of small businesses. However they ranked lowest on the list of being the most costly claims with an average claim costing $8,000. Reputation harm cases averaged about $50,000 per claim. When a reputation harm case is covered with general liability insurance, it can be costly when there is a lawsuit involved. General liability claims may cost over $75,000 for defense and settlement costs when a lawsuit is involved. Statistics show that 35% of general liability claims end up in a lawsuit.

Fires rated in the top five lists for both the most costly and the most common claims for small businesses. In the last 5 years, about 10% of small businesses were affected by fires costing an average of $35,000 for each claim.

The following lists include the most costly and the most common claims.

Most Common

  1. Burglary and Theft
  2. Water and Frost Damage
  3. Wind and Hail
  4. Fires
  5. Slips and Falls
  6. Customer Injuries and Damages
  7. Product Liability
  8. Hit by Object
  9. Reputation Harm
  10. Auto Accident

Most Costly

  1. Reputation Harm
  2. Vehicle Accident
  3. Fires
  4. Product Liability
  5. Customer Injuries and Damages
  6. Wind and Hail
  7. Slips and Falls
  8. Water or freezing Damage
  9. Hit by Object
  10. Burglary and Theft

Small business owners can address these risks with some simple changes in operations and by implementing basic safety precautions. The following tips are recommended for small businesses:

Burglary and Theft

Employers should always conduct background checks prior to hiring employees to prevent workplace theft. Businesses should have controlled entryways and provide codes/keys to trusted employees. It is smart to have enclosed parking areas for better protection from vehicle break-ins and that indoor/outdoor lighting is adequate.

Reputation Harm

In business, it’s important not criticize competitors in front of customers or through public media channels, simply let your products and service represent your business. If you post photos or content on a social media sites or websites, be sure the photos and content are not copyrighted.

Damage from Water or Freezing

When winter rolls around, pipes often freeze or burst when not taken care of properly. Make sure indoor temperatures are adjusted when the temperature outdoors is below freezing. If the building is vacant during colder months, leave the water faucets on so there is a slight drip or trickle. This will also help keep the water temperature above freezing. Key employees on every shift should know where the water shut-off valves are located.


Businesses should update their fire emergency and evacuation plan every year. Evacuation routes must be thought out carefully and posted in areas where all employees will see them. Conduct fire drills frequently and don’t forget to test smoke detectors and carbon monoxide detectors, in accordance with your local fire codes.

Wind and Hail

Businesses should always keep their property free of debris, and have trees and shrubs trimmed regularly. If there are objects outdoors that could be dangerous when there are high winds, move them indoors. Any equipment that cannot be moved or that will become dangerous when there are high winds should be anchored outdoors.

Auto Accidents

Whether your business has a single car or an entire fleet of commercial vehicles, it’s important to establish a Fleet Safety Program. Employers should research driving history (MVR) before clearing employees to drive business vehicles.

For more news and insights on safety tips or how to control risk exposure, contact your SIA Group Risk Advisor or call us toll free at 1.800.682.7741.

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