- 40 percent of small businesses are likely to experience a GL or Property claim in the next 10 years.
- 35 percent of General Liability claims result in a lawsuit and cost about $75,000 to defend and settle.
- 20 percent of all Property claims are triggered by theft, averaging $8,000.
- 10 percent of Property claims are triggered by fires, averaging $35,000.
- Less than 5 percent of General Liability claims are triggered by reputational harm, but they average a staggering $50,000.
Though nearly half of small businesses may face a claim over the next several years, the report isn't all bad news. In fact, perhaps the most heartening takeaway from this study is that a simple Business Owner's Policy can address the claims you're most likely to face.
BOP: It Goes Where the Claims Are
As you may already know from contextual clues, a Business Owner's Policy (BOP) is an insurance package that bundles General Liability Insurance and Property Insurance together. (More on that here: "How BOP Insurance Works.") What you may not know is that this bundle is pretty affordable – for very small businesses with low-risk profiles, premiums can start at about $500 a year. Your rate will vary depending on where your business is and what it does.
Once you have a BOP in place, it may offer coverage for:
- Burglary and theft claims. Your BOP's Property Insurance can help replace stolen property so it doesn't come out of your bottom line.
- Fire damage claims. Again, your BOP's Property Insurance can handle these claims. When a fire destroys your building and your equipment, your policy may help pay for repair or replacement costs.
- Reputational harm claims. The GL portion of your BOP may help pay for advertising injury claims over libel, slander, invasion of privacy, and copyright infringement. It may also pay for legal expenses if the claim goes to court.
- Premises liability claims. If a customer slips and falls on your property and you are liable for the damages, your GL may offer coverage for the incident.
Of course, these are only a few examples of what a BOP can do. You can also customize your policy to offer Cyber Risk coverage, Business Interruption Insurance, and more. Learn more about that in "How to Customize Your Business Owner's Policy."
Managing Risks for Common and Expensive Claims
Though insurance is awfully handy, the claims process is not something most people want to experience. Minimize the chance of facing these claims by:
- Conducting background checks on employees to limit the risk of theft.
- Installing security cameras to monitor the entrance of your business to deter criminals.
- Properly storing flammable chemicals and materials.
- Reading our eBook Tweet or Twibel: The Small-Business Owner's Guide to Advertising Injury to learn how to avoid committing reputational harm on social media.
- Keeping public areas of your business clear of clutter and obstacles.
For more tips that can help you keep claims at bay (and subsequently keep your premiums low!), check out our risk management blog series.