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 harm1, 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. “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 one million
property and liability policies2, 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
lawsuit 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
costly claims. The average cost for a fire claim is $35,000, impacting
10 percent of small business owners in the past five years.
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Top 10 Property and Liability Claims
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Most Common
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Most Costly
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Burglary & Theft
(20 percent)
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Reputational Harm
($50,000)
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Water and Freezing
Damage
(15 percent)
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Vehicle Accident 3
($45,000)
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Wind and Hail
Damage 6
(15 percent)
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Fire
($35,000)
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Fire
(10 percent)
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Product Liability 4
($35,000)
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Customer Slip and Fall
(10 percent)
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Customer Injury or
Damage 5
($30,000)
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Customer Injury and
Damage
(Less than 5 percent)
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Wind and Hail Damage
($26,000)
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Product Liability
(Less than 5 percent)
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Customer Slip and Fall
($20,000)
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Struck by Object
(Less than 5 percent)
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Water and Freezing
Damage
($17,000)
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Reputational Harm
(Less than 5 percent)
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Struck by Object
($10,000)
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Vehicle Accident
(Less than 5 percent)
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Burglary and Theft
($8,000)
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“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:
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Conduct background checks.
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Have adequate devices installed to control unauthorized entry into
your business.
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Install fencing and gates around the building and parking areas.
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Ensure adequate exterior and interior lighting.
Reputational Harm:
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Avoid criticizing a competitor publicly or to customers.
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Be sure to have permission to post photos or other content on your
website to avoid copyright infringement.
Water and Freezing Damage:
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Maintain proper indoor temperature during periods of extremely cold
weather, even when away.
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Clear roofs and overhangs of excessive snow and ice if possible.
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Ensure that key personnel know the location of water shut-off valves.
Fire:
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Establish or update an emergency preparedness plan.
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Plan fire evacuation routes, mark them clearly and drill employees in
using them.
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Test all fire and life safety detection and suppression equipment per
local and national fire codes.
Wind and Hail Damage:
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Treat and maintain trees.
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Protect windows from flying debris.
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Walk the grounds; move objects inside that could become projectiles in
high winds.
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Anchor any equipment stored outside that could be moved by high winds.
Vehicle Accidents:
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Screen employee driving records before allowing them to use their car
for business purposes.
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Do not provide incentives to drivers for speedy deliveries.
To learn more about safety tips to protect a small business visit: www.thehartford.com/losscontrol
or http://www.thehartford.com/business-owner-policy/
to learn more about property and general liability protection options.
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1
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Reputational harm claims include financial damages from libel,
slander, defaming products or services, or violating privacy.
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2
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The information outlined in this release is based on an
analysis of five years of claims data (2010-2014) from more than
one million of The Hartford Business Owner’s policies.
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3
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Vehicle accidents include accidents involving employees of the
small business owner who use their personal vehicles for business
purposes. Average costs can be higher if a lawsuit is involved.
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4
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Product liability insurance may apply to injury or damage
arising out of the use of a covered product.
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5
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Customer injury and damage covers damage to the customer’s
property and injury to the customer caused by the insured small
business owner.
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6
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The wind/hail claims generally involve structural damage,
primarily to roofing or signage.
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About The Hartford
With more than 200 years of expertise, The Hartford (NYSE:HIG) is a
leader in property and casualty insurance, group benefits and mutual
funds. The company is widely recognized for its service excellence,
sustainability practices, trust and integrity. More information on the
company and its financial performance is available at www.thehartford.com.
Join us on Facebook at www.facebook.com/TheHartford.
Follow us on Twitter at www.twitter.com/TheHartford.
HIG-M
Some of the statements in this release may be considered forward-looking
statements as defined in the Private Securities Litigation Reform Act of
1995. We caution investors that these forward-looking statements are not
guarantees of future performance, and actual results may differ
materially. Investors should consider the important risks and
uncertainties that may cause actual results to differ. These important
risks and uncertainties include those discussed in our 2014 Annual
Report on Form 10-K, subsequent Quarterly Reports on Forms 10-Q, and the
other filings we make with the Securities and Exchange Commission. We
assume no obligation to update this release, which speaks as of the date
issued.
From time to time, The Hartford may use its website to disseminate
material company information. Financial and other important information
regarding The Hartford is routinely accessible through and posted on our
website at http://ir.thehartford.com.
In addition, you may automatically receive email alerts and other
information about The Hartford when you enroll your email address by
visiting the “Email Alerts” section at http://ir.thehartford.com.
Copyright Business Wire 2015