The Hartford has released its findings, gathered in a five-year study of its customers, showing burglary, water damage, and fire as the three areas where the most claims are filed by small businesses.
About 20% of all small businesses filed claims for burglary and theft, but the average amount of the claim was at the bottom of the list regarding cost, averaging about $8,000. Reputational harm ranked ninth on the list for how common the claims were, but was first on the list for cost of the claim, averaging $50,000. If litigation ensued, the cost grew to about $75,000.
Right in the middle of both lists, at number five, was fire. The average cost was $35,000 and about 10% of small business had to deal with one.
Vehicle accidents cost an average of $45,000, product liability $35,000 and customer injury or damage $30,000. Problems with the weather included damage from wind and hail, averaging $26,000 and damage from water and freezing at $17,000. Customer slip and fall averaged $20,000 and people or possessions struck by an object, $10,000.
Get the Right Coverage
The study shows that it is essential for a small business to have the right type of insurance coverage. That comes from working over the long term with a knowledgeable agent, asking questions, and keeping the agent updated about changes that could affect coverage.
Too often insurance is taken for granted. Stephanie Bush, an executive in the insurance industry, says, “An unexpected event happens far more often than small business owners realize.” She points out that in addition to adequate coverage, businesses can set up their business and premises so that fewer accidents and damage happen.
There are a number of ways that insurance companies recommend a small business protect itself. For example, to avoid slip and fall injuries, the company needs to make it a daily chore to keep sidewalks clean outside and clutter out of hallways and pathways throughout the building.
Company vehicles should be driven by qualified drivers. It is standard practice to get a driving history to make sure an employee can be trusted with the company car. In addition, drivers should not be rewarded for completing errands and deliveries at excess speed.
To avoid costly reputational harm claims, a company’s website should have photos and videos that have been properly cleared, to assure protecting privacy rights. No member of the staff should every openly criticize a competing business in public or even to customers.