Top 5 Most Common Business Insurance Claims

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When small business owners buy insurance policies, they don’t expect to incur losses. Most view insurance not as protection from the risks of business ownership but as a shield that allows them to be safe instead of sorry after a disaster.

However, attorneys and insurance adjusters see it differently.

According to a research study from The Hartford, burglary and theft make up approximately one-fifth of yearly insurance claims.

While most companies do not experience significant losses, ordinary burglary and theft incidents bring claims that can run into the tens of thousands of dollars.

These figures are considerable enough to significantly hurt a company that lacks insurance coverage. Here, business owners will get more information about the five most common types of business insurance claims.

business insurance claims

1. Theft and Burglary

As mentioned above, incidents of burglary and theft make up about 20% of business insurance claims.

These claims aren’t just for lost products and merchandise but also to cover the damage a burglar or thief causes.

2. Water Damage

Although water can be calming and relaxing to some, most small business owners want to avoid the issues that come with storms, floods, and other water-related events.

These challenges often occur during cold winters when freezing cause pipes to burst, but they can happen during summer as well. About 15% of insurance claims are related to water damage, and they cost the average small business owner roughly $17,000 per event.

3. Injuries to Visitors

No matter what kind of company you’re running, there’s always a risk of customer injury. These events may happen in various ways. A customer may slip and fall, or they might knock something over and hurt themselves.

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The average claim costs approximately $30,000, and the most common type of customer injury is a slip and fall.

4. Reputational Losses

Reputational damage is often related to third-party claims made for civil infractions such as libel, slander, or invasion of privacy.

While these events only account for about five percent of yearly insurance claims, they come at a high cost, with the average insurance claim costing nearly $50,000.

5. Product Liability

In most cases, a company’s vulnerability to product liability claims depends on its operational structure and the warranty coverage that accompanies its offerings. Making up nearly five percent of claims each year, product liability costs the average business approximately $35,000 per incident.

Avoiding Business Insurance Claims

Most business liability risks involve third-party injuries. Business owners often face liability claims when employees damage clients’ property or when someone is hurt on the premises. Insurance protects owners from lawsuits, but there are ways to avoid claims entirely.

  • Minimize clutter. Items such as boxes and cords can pose trip hazards. Keep exits and walkways debris-free to minimize the risk.
  • Alert employees and visitors to hazards. Whether it’s a temporary or permanent risk, be sure to warn others of the possibility of danger.
  • Maintain the property. An icy walkway or torn rug may result in a customer being injured. Evaluate such risks and address them promptly.
  • Use social media wisely. One false or rude post by an employee or business owner could lead to allegations of libel or slander.

While these tips aren’t foolproof, they will help minimize the risk of a commercial insurance claim.

Business Insurance Protects Owners and Their Companies

Buying the right business insurance policy will safeguard a business owner and their company. In today’s litigious corporate environment, it’s important to have a level of coverage exceeding that of standard policies.

With help from an attorney, a public adjuster, and the right policy, any business owner can protect themselves from the most common risks.

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Anyaogu Ikechukwu

Anyaogu Ikechukwu is the founder and editor of Passion Entrepreneurs. A blog for entrepreneurs to start, build and promote their business and make passive income. In this Entrepreneur platform, you're welcomed to promote your startup or allow us to help you dominate the internet.

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