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Covering Your Assets

An insurer offers advice on how to prepare and protect businesses from common and costly property and general liability claims.


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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 harm, 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, Conn.-based company. “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 1 million property and liability policies, 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 suit 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 most costly claims. The average cost for a fire claim is $35,000, impacting 10 percent of small-business owners in the past five years.

“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.”

Based on the claims data, The Hartford recommends small-business owners follow these tips:

Burglary and theft
- Conduct background checks
- Have adequate devices installed to control unauthorized entry into your business
- Install fencing and gates around the building and parking areas
- Ensure adequate exterior and interior lighting

Reputational harm
- Avoid criticizing a competitor publicly or to customers
- Be sure to have permission to post photos or other content on your website to avoid copyright infringement

Water and freezing damage
- Maintain proper indoor temperature during periods of extremely cold weather, even when away
- Clear roofs and overhangs of excessive snow and ice, if possible
- Ensure that key personnel know the location of water shut-off valves

- Establish or update an emergency preparedness plan
- Plan fire evacuation routes, mark them clearly and drill employees in using them
- Test all fire and life safety detection and suppression equipment per local and national fire codes

Wind and hail damage
- Treat and maintain trees
- Protect windows from flying debris
- Walk the grounds; move objects inside that could become projectiles in high winds
- Anchor any equipment stored outside that could be moved by high winds

Vehicle accidents
- Screen employee driving records before allowing them to use their car for business purposes
- Do not provide incentives to drivers for speedy deliveries

To learn more about safety tips to protect a small business, visit thehartford.com/losscontrol. Go to thehartford.com/business-owner-policy to learn more about property and general liability protection options. 


This article originally appeared in the July 2015 issue of Pet Product News.

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