The Most Common Reasons Small Businesses Claim on Insurance

If you have a small business and are wondering why you need to be paying insurance costs each month, look no further than here where you will get factual statistics of the sort of claims people like you have made recently.

Why Does a Business Need Insurance?

It can be hard to predict when disaster will strike and prepare for the worst; however, failure to do so can cost you and your company so it’s essential to understand the risks involved in running a small business.

Forty percent of all small businesses will make a claim on their insurance. These can range from small payouts to large sums of money that are enough to put even successful companies out of business.

Therefore, before you obtain your small business insurance quote, check out this list of the most common claims made:

1. Burglary and Theft

Burglary and theft affected twenty percent of small businesses in the past five years, putting it at the top of the list of most common claims made. Even employees are known to have committed theft at their place of work so it’s difficult to prevent entirely.

However, it is important to note that this also accounted for the lowest claim made in terms of cost with the average claim only coming to around eight thousand dollars.

2. Water and Freezing Damage

Fifteen percent of small business claims are a direct result of water and freezing damage.  A burst pipe can be financially devastating for a small business, and as well as incurring costs in repairs, it can often lead to a loss of revenue if your business should have to close as a result.

Read: House Flooded: 10 Important Things to Do After a Flood

There can also be knock-on costs, such as structural damage and mold growth. If your business operates out of a cold climate area, then you will be especially at risk and should take steps to protect your business and even your staff from electric shock to illness from waterborne pathogens.

3. Wind and Hail Damage

Wind and hail damage accounts for the sixth-highest claim in terms of cost with the average claim coming to around twenty-six thousand dollars. Strong winds and hailstorms can cause significant damage to your business premises, resulting in costly repairs and business disruption.

As well as significant structural damage from a storm, gale force winds can push trees or other objects onto buildings and hail can shatter windows or significantly dent company vehicles. Fifteen percent of businesses will claim for wind and hail damage so it’s crucial that you protect your business from the elements.

4. Fire

Ten percent of all small businesses claimed for damages as a direct result of fire. Fire is also the third most costly claim with amounts averaging thirty-five thousand dollars.

In addition to fire, smoke, and soot damage, water damage caused by the firefighting efforts and loss of revenue while your premises are restored can all add up.

5. Customer Slip and Fall

More than two thousand people go to the emergency room each day for a slip and fall accident in the United States alone.

Ten percent of small businesses will have to make a claim for this at an average cost of twenty thousand dollars, making it the seventh most costly claim for your business.

Read: 10 Types of Business Insurance You Need to Know About

6. Customer Injury and Damage

Customer injury and damage is the fifth most expensive claim against your small business, with an average cost of thirty thousand dollars.

This can happen as a result of falling objects within your premises, chemical leaks, injury from other customers, or overcrowding, just to name a few.

7. Product Liability

Defective products cause thousands of injuries every year, and while less than 5% of businesses will have to make a claim for product liability, the amounts paid out are costly, averaging out at around thirty-five thousand dollars.

Responsibility for a product defect that causes injury lies with all sellers of the product who are in the distribution chain. If this is your company, then it would be prudent to ensure that you have product liability cover in place.

8. Struck by Object

‘Struck by Object’ occurs when an object strikes and injures an employee, worker, or customer. Due to rolling, sliding or falling objects this happens often and payouts can cost on average ten thousand dollars.