What types of insurance claims do small businesses file most often? Unexpected events occur much more frequently than many business owners assume they will. Having a strong business liability insurance program is a major aspect of risk management and reducing the impact of claims. In addition, understanding which claims are most commonly filed by businesses (and which ones tend to be the most costly) can also help you to manage your organization’s risks.
Most Frequent Claims
Here are the most common types of claims that have been recorded, in descending order:
- Burglary and theft – The perpetrators may be dishonest employees or outsiders. Help prevent these claims by implementing background checks and installing fences and gates, adequate lighting, and access controls to the premises.
- Water and freezing damage – Avoid freezing losses by clearing roofs of snow and ice, training key workers how to shut off the water, and maintaining an adequate temperature indoors so pipes don’t freeze.
- Wind and hail damage – Mitigate these losses by maintaining trees properly, anchoring outdoor equipment, and protecting windows from flying objects.
- Fire – To minimize fire losses, have an emergency preparedness plan in place and conduct periodic fire drills and test fire detection and suppression equipment regularly.
- Customer slips and falls – Prevent many slip-and-fall accidents by practicing good housekeeping and proper maintenance.
- Customer injury and damage – A customer can be injured at a business location if, say a ceiling tile falls on his head or an employee spills hot coffee on him.
- Product liability – A company’s vulnerability to a product liability claim depends on a variety of factors. These include the types of products it sells and the warranties it provides.
- Struck by an object – A wide variety of moving objects can cause injuries. Examples are cars and trucks, mobile equipment, and falling construction tools.
- Reputational harm – These are third-party claims for acts such as libel and slander that allegedly damaged the plaintiff’s reputation. To avoid such claims, refrain from criticizing competitors publicly. It can be very beneficial to obtain permission from content owners before posting content on their website.
- Vehicular accident – It is smart to institute a vehicle safety program and speak to your business liability insurance agent about review employees’ motor vehicle reports.
Loss Frequency Versus Severity
Claim frequency refers to the probability that a loss will occur. Some types of losses happen frequently. For instance, cleaning businesses often incur numerous small property damage claims. Consequently, liability policies covering cleaning businesses often include a property damage deductible.
Claim severity refers to the size of a loss. Some claims may occur infrequently but have a high severity. For example, a surgeon may perform hundreds of surgeries before she incurs a single malpractice claim. When a claim is eventually filed, it is likely to be substantial.
About Bozzuto & Co. Insurance Services, Inc.
Bozzuto & Company Insurance Services has provided business and personal insurance solutions to clients throughout California since its founding in 1981. Our experienced staff understands the unique needs that each person has when insuring their lives and their businesses, and we pride ourselves on our deeply personal customer service. We are happy to help you through every step of the insurance selection process. Contact us today at (800) 400-6394 to learn more about what we can do for you.