Covering Your Assets
An insurer offers advice on how to prepare and protect businesses from common and costly property and general liability claims.
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
- 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
- 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.
|Top 10 Property and Liability Claims|
|Most Common||Most Costly|
Burglary and Theft: 20%
Water and Freezing Damage: 15%
Wind and Hail Damage: 15%
Customer Slip and Fall: 10%
Customer Injury and Damage: under 5%
Product Liability: under 5%
Struck by Object: under 5%
Reputational Harm: under 5%
Vehicle Accident: under 5%
Reputational Harm: $50,000
Vehicle Accident: $45,000
Product Liability: $35,000
Customer Injury or Damage: $35,000
Wind and Hail Damage: $26,000
Customer Slip and Fall: $20,000
Water and Freezing Damage; $17,000
Struck by Object: $10,000
Burglary and Theft: $8,000
This article originally appeared in the July 2015 issue of Pet Product News.