Four out of 10 small businesses are likely to experience a property or general liability claim in the next 10 years, according to an analysis of The Hartford's small business claims. Topping the list for the most common claim is burglary and theft, however, the most costly claim for a small business is reputational harm1, which includes libel, slander and violation of privacy."An unexpected event happens more often than many small business owners realize," said Stephanie Bush, senior vice president of Small Commercial insurance at The Hartford. "It is important that a small business owner work with a local independent agent to find the right coverage to protect them at various stages of their business and minimize the impact of a potential claim."
Based on a five year analysis of data from more than one million property and liability policies2, burglary and theft impacted 20 percent of small business owners in the past five years. However, burglary and theft ranked lowest out of the top 10 most costly claims, averaging $8,000, compared to reputational harm claims, which cost $50,000 on average.
A claim payout on a reputational harm claim, covered through a general liability policy, can run much higher if a lawsuit is involved. If a lawsuit is involved, a general liability claim can average more than $75,000 per case to defend and settle. Based on The Hartford's claims history, 35 percent of all general liability claims result in a lawsuit.
Fire claims are ranked in the top five of both the most common and costly claims. The average cost for a fire claim is $35,000, impacting 10 percent of small business owners in the past five years.
| Top 10 Property and Liability Claims | ||||
| Most Common |
Most Costly |
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|
Burglary & Theft |
Reputational Harm |
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Water and Freezing |
Vehicle Accident 3 |
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|
Wind and Hail |
Fire
($35,000) |
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Fire |
Product Liability 4 |
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|
Customer Slip and Fall (10 percent) |
Customer Injury or |
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|
Customer Injury and (Less than 5 percent) |
Wind and Hail Damage
($26,000) |
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|
Product Liability (Less than 5 percent) |
Customer Slip and Fall |
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|
Struck by Object |
Water and Freezing |
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|
Reputational Harm |
Struck by Object |
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|
Vehicle Accident |
Burglary and Theft |
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"A small business owner can take steps to avoid these types of claims," said John Kinney, chief claim officer at The Hartford. "By making simple modifications to operating procedures or following a few safety tips, a business can be better positioned to prevent accidents and property damage."
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1 |
Reputational harm claims include financial damages from libel, slander, defaming products or services, or violating privacy. |
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2 |
The information outlined in this release is based on an analysis of five years of claims data (2010-2014) from more than one million of The Hartford Business Owner's policies. |
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3 |
Vehicle accidents include accidents involving employees of the small business owner who use their personal vehicles for business purposes. Average costs can be higher if a lawsuit is involved. |
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4 |
Product liability insurance may apply to injury or damage arising out of the use of a covered product. |
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5 |
Customer injury and damage covers damage to the customer's property and injury to the customer caused by the insured small business owner. |
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6 |
The wind/hail claims generally involve structural damage, primarily to roofing or signage. |