If you are the owner of a small business, you are well aware of the potential harm posed by liability and property damage claims. When business owners undertake risk assessments as part of the process of purchasing or updating their commercial coverage, it is important to understand both the most prevalent types of hazards and liability threats as well as the most costly claims. A recent report produced by The Harford and published in the Insurance Journal provides helpful insight for business owners making decisions about coverage priorities and limits.
Obviously, a range of factors will determine the specific insurance needs of a company, including annual revenue, number of employees, goods and services provided, location along with many other considerations. However, the Hartford list provides an overview of the most common potential insurable risks based on actual claims across multiple sectors of the economy. The study involved analyzing over a million claims for loss related to property damage and liability losses during a five year period.
Liability claims also are more costly because they often result in the cost of defense being incurred. The average cost of defense of lawsuits involving reputation harm claims was $75,000. Further, a lawsuit was filed in more than one in every three instances involving general liability claims.
Another discovery that might surprise many commercial policyholders is that fire might be regarded as the most dangerous threat. Fire was the only peril that ranked in the top five for both prevalence of risk and average cost of a claim. One in ten insured businesses filed a fire claim during the five year period with the average cost of a fire claim being estimated at $35,000. The top ten lists for the most common and most costly claims are provided below:
Top 10 Most Common Claims Percentage of Claims
Theft-Related Claims (includes Burglary) 20 Percent
Freezing and Water Damage Claims 15 Percent
Damage from Hail and Wind 15 Percent
Fire Damages 10 Percent
Slip and Fall Accidents (Customers) 10 Percent
Injury Property Damage to Customers Less Than 5 Percent
Defective Product Injury Claims Less Than 5 Percent
Struck by Object Injury Claims Less Than 5 Percent
Claims for Damage to Reputation Less Than 5 Percent
Motor Vehicle Accident Claims Less Than 5 Percent
Top 10 Most Costly Claims Average Amount of Claim
Harm to Reputation Claims $50,000
Motor Vehicle Collision Claims $45,000
Fire-Related Claims $35,000
Product Liability Claims $35,000
Damage or Injury Experienced by Customers $30,000
Wind/Hail Property Damage $26,000
Customer Fall-Related Injuries $20,000
Damage from Water and Freezing $17,000
Struck by Object $10,000
Commercial insurance coverage is a costly investment especially for startups, so business owners often must make tough decisions about the scope of coverage. Although the best approach is to discuss the issue with your insurance agent and an experienced insurance claims lawyer, this list can provide a helpful starting point when considering the magnitude of particular risks. If you have questions about Florida commercial insurance claims, you are invited to contact our law firm to speak to an experienced Miami commercial insurance claims attorney. My law firm represents policyholders in claims disputes in Miami and throughout Florida. The Law Firm of J.P. Gonzalez-Sirgo, P.A. offers free consultations and case evaluations. No Recovery, No Lawyer Fees. Call 305-461-1095 or Toll Free 1-866-71-CLAIM.