What Are the Most Common Insurance Claims Small Businesses Face?

When you're focused on the daily operations of your business, insurance may seem like an abstract concept. It might seem like it applies only to things that are unlikely to happen. Still, if you think a bit more deeply about specific claims and how they could happen in your business, it might help you better understand the benefit of business insurance. Here are some of the most common claims according to the Insurance Journal.

Burglary and Theft

Burglaries and thefts are the most common business insurance claim at 20% of filings. Theft includes employees stealing cash or merchandise during their shifts or by using their access during other hours. The average loss is $8,000, although this can be higher depending on the type of merchandise and amount of cash you have on hand. Besides coverage for the value of the property stolen, you can choose coverage that includes lost income. It can help out if someone steals an important tool and you lose sales during the time it takes you to replace it.

Reputational Harm

Reputational harm is the most expensive type of claim even though it makes up less than 5% of claims. The average claim value is $50,000. Reputational harm can include allegations of libel or slander leveled by a third party. For example, this may occur if you or an employee respond to an online review or make a social media post that causes a customer to sue. You may also harm a customer's reputation if your poor work or negligence makes them look bad to their own customer. Since reputational harm is an action against another, it is a type of liability claim.

Water and Freezing Damage

Water and freezing damage makes up another 15% of claims. Scenarios include your heat failing or someone forgetting to turn on your heat and your pipes bursting. It might also cover you if a water leak that you couldn't have prevented otherwise damages your building, inventory, or equipment. These claims fall under business property insurance.

Wind and Hail Damage 

If you own your building, then you need wind and hail coverage. This covers you for damage that happens during severe storms whether that's a tree blowing into your building, another object flying into a window, or hail damaging your roof. These claims make up another 15% of claims.

Customer Injuries

Customer slip and falls make up 10% of claims, and other injuries make up another 5%. If a customer sues you for their injury, your liability coverage will help you defend or settle the claim.

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