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 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.
Top 10 Property and Liability Claims Most
Common
Most Costly
Burglary & Theft(20 percent)
Reputational Harm($50,000)
Water and FreezingDamage(15 percent)
Vehicle Accident 3($45,000)
Wind and HailDamage 6(15 percent)
Fire
($35,000)
Fire(10 percent)
Product Liability 4($35,000)
Customer Slip and Fall
(10 percent)
Customer Injury orDamage 5($30,000)
Customer Injury andDamage
(Less than 5 percent)
Wind and Hail Damage
($26,000)
Product Liability
(Less than 5 percent)
Customer Slip and Fall($20,000)
Struck by Object(Less than 5 percent)
Water and FreezingDamage($17,000)
Reputational Harm(Less than 5 percent)
Struck by Object($10,000)
Vehicle Accident(Less than 5 percent)
Burglary and Theft($8,000)
“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.
Fire:
- 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: www.thehartford.com/losscontrol or
http://www.thehartford.com/business-owner-policy/ to learn more
about property and general liability protection options.
1
Reputational harm claims include financial
damages from libel, slander, defaming products or services, or
violating privacy.
2
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.
3
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.
4
Product liability insurance may apply to
injury or damage arising out of the use of a covered product.
5
Customer injury and damage covers damage
to the customer’s property and injury to the customer caused by the
insured small business owner.
6
The wind/hail claims generally involve
structural damage, primarily to roofing or signage.
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.
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The HartfordDebora Raymond,
860-547-4611debora.raymond@thehartford.comorMichelle Symington,
860-547-5385michelle.symington@thehartford.com
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