Claims can be a common occurrence for any business. Whether you run a multi-million dollar company with hundreds of employees. Or you run a company out of your house with cousin Mel expect to file a claim now and again. Some industries will be more susceptible than others to certain types of claims. However, all companies should watch out for the most common insurance claims filed by businesses. Keeping the most common claims in mind can help educate you on what business insurance options will offer you the best protection.
The Five Most Common Business Insurance Claims:
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Burglary and Theft
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Burglary and theft claims include internal theft by employees as well as break-ins. 42% of inventory loss in U.S. stores is caused by employee theft. Low-level employees commit theft more often. However, owners and executives commit theft that results in nearly 17x the value stolen as theft from low-level employees.
Coverage options to consider:
Commercial property coverage is a good place to start. Adding a crime insurance endorsement and employee dishonesty/theft endorsement to your policy will ensure you are fully protected.
How to minimize the risk:
To prevent break-ins, invest in a quality security system. In 2015, the FBI crime report stated that burglars are 4.5x more likely to choose a business without an alarm system as opposed to businesses with an alarm system. Also, make sure your business is well lit to discourage would-be thieves. Having a solid set of subtle internal controls, such as inventory checks, can help mitigate against employee theft.
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Water-related Damage
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Damage from water to businesses can come from snow, flooding, freezing temperatures and burst pipes. Water damage can also come from condensation and moist areas where it can cause mold which creates a set of problems on its own. Insurance companies paid out $13 billion in 2017 due to water damage alone.
Coverage options to consider:
Commercial property insurance will usually cover water damage from snow, freezing temperatures and burst pipes, but not from floods. However, you can purchase flood insurance on top of your commercial property insurance. This will help protect you in the event of water damage caused by a flood.
How to minimize the risk:
Keep your building’s roof clear of snow and ice to prevent water damage to your roof. Make sure someone on staff knows how to shut off the water in the event of a plumbing incident. Do some research to find out if the area your business is in is susceptible to flooding.
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Wind and Hail Damage
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Damage from strong winds and hail can be detrimental for not just the business but the property owner as well. Wind and hail routinely cause $8 billion to $14 billion in damage and losses. Wind and hail can damage not only structures but vehicles as well. Illinois regularly ranks about 5th in the country for hail damage claim frequency.
Coverage options to consider:
As with water damage claims, commercial property insurance will cover losses due to wind and hail damage. If you have commercial vehicles consider business auto insurance to protect them from hail damage.
How to minimize the risk:
Keep trees near your property well maintained, strong winds can turn dead branches its battering rams. Anchor outdoor equipment that could be blown into your building by strong winds, and protect windows if a heavy storm is predicted.
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Fire Damage
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According to the Insurance Information Institute, a structure fire occurs every 64 seconds. In 2018, structure fires not related to wildfire caused $11.1 billion in property damage.
Coverage options to consider:
Commercial property insurance will cover repairs for fire damage. Business income insurance can make up for lost revenue after the fire.
How to minimize the risk:
Inspect and maintain fire extinguishers on the property and train all employees on their use. Install a fire sprinkler or fire suppression system. And regularly clean and inspect any electrical equipment that could cause a fire.
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Customer Slips and Falls.
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The most common cause of injuries sustained by customers of small businesses are slips and falls. These can range from negligible to fatal.
Coverage options to consider: General liability coverage will cover most losses stemming from a customer slip-and-fall accident. Consider commercial umbrella insurance if your business is susceptible to slips and falls.
How to minimize the risk: Clean spills promptly to avoid slippery floors. Fix or remove tripping hazards such as individual boxes on the ground and uneven flooring. Also, keep your space clear of other clutter that could trip customers such as loose electrical cords. If you experience fraudulent claims on your property, consider installing cameras to help you in the event of a claim.
Claims are never a good thing, but as they say, that is why you have insurance. Unfortunately, some business owners do not find it necessary to ensure they have the proper endorsements to protect them against some of the most common insurance claims.
If you are shopping for a commercial insurance policy contact us at Konen Insurance and we can help. We work with companies of all sizes and throughout every industry. Our goal is to ensure that you and your business are protected by policies that are customized to your specific needs.
