Four out of ten small businesses will have an insurance claim in the next decade. This will likely be a property or liability insurance claim, and the most probable cause will be burglary and theft. However, some will be dealing with the most expensive of all claims for a small business, harm to reputation, including slander, libel and violation of privacy.
The numbers come from a five-year study done by The Hartford, analyzing more than one million policies dealing with property and liability. Here is a breakdown:
20% of small businesses had burglary and theft claims, averaging $8,000
15% for water and freezing damage
15% for wind and hail damage
10% for fire
10% for slip and fall
<5% for vehicle accident
Reputational harm cases averaged $50,000, covered under general liability. If litigation was involved, the claims ranged much higher, often over $75,000. According to their records, The Hartford found that 35% of general liability claims resulted in lawsuits.
How To Protect Yourself
Small businesses need the appropriate insurance to ensure peace of mind and the money at hand to stay in business if Mother Nature or angry people make trouble. Insurance helps to minimize the impact of unexpected events.
You can also reduce the chance of accidents at your business or involving your employees. Here are four suggestions that had help.
#1. Reputational Harm
Though potentially the most costly, it is among the easiest to avoid. Don’t criticize your competition to your customers or in public. And in the age of digital invasion of privacy concerns, be very sure that you have permission to post a photo or video on your website.
Create an emergency preparedness plan. You can get help on the Occupational Safety and Health Administration website. Implement it and have drills so employees know what to do in case of a fire. Keep fire extinguishers easy to find. Use the most modern and effective fire detection equipment you can afford.
#3. Vehicle Accidents
Don’t let just anyone use the company car. Know the driving history of your staff and let only qualified people drive. Never offer incentives for speed in deliveries or other errands. This just invites an accident.
#4. Burglary and Theft
Use security devices like cameras, locks, fences and gates, including around the parking area. Use lots of lighting around the exterior of buildings and parking lot.
It pays to have adequate business insurance coverage to keep your business going even in the face of damaging events.