When a small business owner purchases insurance, they don’t do so with the expectation of a loss. Most see insurance not as a shield against the daily risks inherent in running a business, but as a buffer that allows them to be safe, rather than sorry, after a catastrophic event. However, a public adjuster would beg to differ.

According to a 2015 study from The Hartford, theft and burglary make up roughly 20% of all claims filed each year. Furthermore, while most businesses never experience multimillion-dollar losses, ordinary theft and burglary incidents result in claims averaging from $8000 to $50,000. These figures are quite considerable, and they can hurt businesses that don’t have the right coverage. In this guide, you’ll learn about the most common business insurance claim types.

Burglary and Theft

As mentioned in the section above, incidents of theft and burglary make up one-fifth of annual small business insurance claims. Such claims are made not only on lost merchandise and products, but on the damages caused by a break-in or burglary.

Water Damage

Although Bruce Lee told aspiring martial artists to be more like water, most business owners would rather avoid the problems that come with floods, rainstorms, and other water incidents. These events typically occur during winter when ice causes pipes to burst, but they can occur during the summer rainy season as well. Water damage makes up approximately 15% of all annual business insurance claims, and they carry an average cost of $17,000 to small business owners.

Customer Injuries

No matter what type of business you operate, there’s always the potential for customer injuries. These events occur in a variety of ways; customers may slip or fall, or they may even knock a shelf over, injuring themselves in the process. The average customer injury claim costs $30,000, and that’s from just one complaint. Customer injuries make up about 10% of claims each year, with the most common injury being a slip and fall on the company’s premises.

Reputational Damage

Here, reputational damage refers to a third-party claim made against a company for a civil infraction like invasion of privacy, slander, or libel. While reputational damage only makes up 5% of yearly small business insurance claims, it comes at a high cost, with the average claim costing approximately $50,000.

Product Liability

In most instances, a company’s susceptibility to product liability depends on the nature of its operations and the warranties accompanying the products being sold. Making up about 5% of yearly claims, product liability, if left unaddressed, may result in severe financial fallout of $35,000 or more annually.

In Closing

Purchasing the right type and amount of business insurance coverage is essential to properly safeguard yourself and your company. In today’s litigious business environment, it’s more important than ever to buy a level of liability coverage that’s above and beyond that afforded by standard business policies. With the help of a good policy and a public adjuster, you can ensure that you’re protected from the common risks listed above, as well as others not listed.

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