The Hartford: 40% of Small Businesses Will Sustain a Claim Within 10 Years

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 harm, which includes libel, slander and violation of privacy.

Based on a five year analysis of data from more than one million property and liability policies, 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.

($35,000) Fire
(10 percent) Product Liability
($35,000) Customer Slip and Fall

(10 percent) Customer Injury or
Damage ⁵
($30,000) Customer Injury and
Damage

(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 Freezing
Damage
($17,000) Reputational Harm
(Less than 5 percent) Struck by Object
($10,000) Vehicle Accident
(Less than 5 percent) Burglary and Theft
($8,000)

Source: The Hartford