One of the largest commercial insurance carriers in the country, The Hartford, released a study that analyzed claims out of their small business insurance unit over the five-year period of 2010 through 2014. The results reveals the risk America’s small businesses face and the potential effects and costs they face when they operate without insurance. Incredibly, the study found that 4 out of 10 small businesses, or 40%, will experience an event that triggers an insurance claim within any given 10 year period.
Theft and burglary costs hundreds of billions of dollars per year and much of that is commercial in nature. As a result, 20% of the claims filed by The Hartford’s small business clients were for theft. However, if there’s a silver lining to theft and burglary related claims it’s that this is the least costly type of claim with the average loss being $8,000.
#2 Water Damage
Water-related damage made up 15% of the claims filed in The Hartford’s five-year sample. The most common culprits within this group were flooding from frozen pipes that ended up bursting as well as collapsed or damaged roofs from snow and ice accumulation. The average loss from this category came in at $17,000.
#3 Wind & Hail Damage
This category also made up 15% of the total claims analyzed. The average loss on wind and hail related claims for The Hartford’s customers was $26,000.
Making up 10% of the claims in The Hartford’s study, fire is the third most costly claim, according to The Hartford, with the average loss amounting to $35,000. This also helps explain why insurance carriers will greatly increase insurance premiums for companies that lease office space that either lacks an adequate fire sprinkler system or with a system that is inoperable.
#5 Customer Injuries
Injuries to a customer were the fifth most common and fifth most expensive small business insurance claim accounting for 10% of the total claims in The Hartford’s study with an average loss of $30,000. Because of the high rate of fraud among reported customer injuries, it is paramount that small business are properly insured.
If you’re a current small business owner without insurance or an entrepreneur thinking about starting a company, hopefully this study, and the insights gained from it, will help prioritize things for you regardless of the stage your business is in.
Get in touch with your UniAmerica Insurance agent today or give us a call at 1-310-835-3373.