According to an analysis of The Hartford’s small business claims 4 out of 10 small businesses will likely experience a property or general liability claim in the next 10 years. The most likely one being burglary and theft, with the most costly claim for a small business is reputational harm, including libel, slander and violation of privacy.
10) Burglary and Theft – $8,000 – 20% of claims
Having a break-in is never part of the businesses long term plan, but according to Hartford, burglary and robbery account for 20% of small business claims. The law makes a slight differentiation between burglary and robbery:
- Burglary: Unlawful entry into a structure, typically a break-in
- Robbery: Taking or attempting to take something that has value from someone by using intimidation, force or threats, the classic case being a bank robbery
Aside from burglars stealing computers, laptops and other tech they may steal or damage prototypes or important files. In addition there are also the cases of robbery, where the damage happens through intimidation or force.
According to Hartford this accounts for 20% of claims with the average amount adding up to $8,000.
9) Water and Freezing Damage – $17,000 – 15% of claims
Water may be an essential part of life, but in the wrong place at the wrong time it can be a destructive and costly force. If your business has any machinery, appliances, or even a broken sink or toilet it can lead to extensive water damage that can damage the building itself, the pipes and equipment, computers and files.
8) Wind and Hail Damage – $26,000 – 15% of claims
Wind and hail can cause severe property damage to your office building, usually connected to thunderstorms and tornadoes and can cause anything from roof damage to shattered windows. Though typically affecting the Midwest and Great Plains, every state can be affected.
7) Fire Damage – $35,000 – 10% of claims
One of the toughest things that can happen to a business is fire damage. The damage it causes to the building, the smoke damage and the loss of work can cripple a business. Equally tough is after the fire, the ordeal that a business is put through to get their business back together.
6) Customer Slip and Fall – $10,000 – 10% of claims
A slip and fall accident may seem like a cliché, in reality they account for a significant number of injuries to customers and employees every year.
Slip and falls are the most preventable accidents to occur in the workplace. Customers can get hurt but clutter, wet floors, improper cleaning or a lack of hazard identification, yet a small thing like a slippery when wet sign can prevent this.
5) Customer Injury and Damage – $30,000 – less than 5%
An employee may cause a customer serious damage through negligence such as a car accident. Should the business be held liable, they can be charged with having to pay. The law blog Nolo.com looks at the common personal injury claims with the most common being:
- Medical treatment – Cost, reimbursement and compensation of medical treament
- Income – Income lost and money lost in the future
- Property loss – Vehicles, clothing, or other items damaged as a result of the accident
- Pain and suffering – Compensation for pain and serious discomfort suffered during the accident and its immediate aftermath as well as ongoing pain that can be attributed to the accident.
- Emotional distress – Compensation for the psychological impact of an injury including fear, anxiety, and sleep loss.
- Loss of enjoyment – Compensation keeping the plaintiff from enjoying day-to-day pursuits like hobbies, exercise, and other recreational activities
- Loss of consortium – Damage related to the impact the injuries have on the plaintiff’s relationship with their spouse
4) Product Liability – $35,000 – Less Than 5%
Nothing is as bad as working hard to put out a product, only to have a customer get injured using it. Defective or dangerous products are the cause of thousands of injuries every year in the U.S. This includes:
- Defectively Manufactured Products – A product that had an error in making it, such as a problem at the factory where it was made.
- Defectively Designed Products – The product’s design is inherently dangerous or defective.
- Failure to Provide Adequate Warnings or Instructions – Typically involves a product that is dangerous in some way that’s not obvious to the user or that requires the user to exercise special precautions or diligence when using it.
3) Struck by Object – Less Than 5% – $10,000
Struck-by objects is a leading cause of construction-related deaths. According to the Department of Labor approximately 75% of struck-by fatalities involve heavy equipment such as trucks or cranes. This can involve damage from vehicles, falling/flying objects or constructing masonry walls.
2) Reputational Harm – Less Than 5% – $50,000
You can just look at AT&T’s tasteless 9/11 ad or one of the many badly placed ads in magazines that ended up making a brand look like a laughingstock and be attacked in the media. Or if an employee goes “off message” and tweets to the wrong account. Small innocuous things like this these things can really tarnish your brand and have the potential to ruin your company’s hard-fought reputation.
1) Vehicle Accident – Less Than 5% – $45,000
Auto accidents typically happen when you need it the least. And the most careful drivers may be involved, through no fault of their own, though an auto malfunction or thrugh being distracted by a phone call.
You might not think much of slip and falls other than a small scrape or a bruised knee, but they can be quite severe and lead to serious injuries. Many businesses don’t take proper care to prevent injuries and it costs them tens of thousands of dollars each year. The worst part is that it’s entirely preventable.
According to the U.S. Department of Labor, slips and falls cause a major loss in productivity. In previous years there was an average of:
- 14 work days were lost due to falls to a lower level.
- 9 work days were lost due to falls on the same level.
- 7 work days were lost due to slips and trips.
In addition, slips and fall are extremely costly, in previous years.
- The average workers’ compensation cost for a slips and trips was $20,228.
- The average incurred workers’ compensation cost per slips and fall exceeded the average cost of other injuries by 14%.
In general, slips and trips occur due to a loss of traction between the shoe and the walking surface or an inadvertent contact with a fixed or moveable object which may lead to a fall. There are a variety of situations that may cause slips, trips and falls.
- Wet floors
- Loose flooring, carpeting or mats
- Uneven walking surfaces
- Freshly waxed or polished floors
- Uneven or missing bricks and tiles
- Broken steps or having no handrails
- Office Clutter
- Cords or cables
- Open file cabinets
- Damaged ladder steps
- Weather hazards – rain, sleet, ice, snow, hail, frost
Here are six guidelines to help you create a safer working environment for you and your employees.
Create Good Housekeeping Practices
Good housekeeping is extremely important to keeping the office clean and hazard free. Aside from making the workspace look better it keeps potential hazards down to a minimum. Poor housekeeping can easily lead to workplace injuries costing thousands of dollars on bills and lost productivity. When an organization’s offices are clean and well organized, it’s a good indication that its overall safety program is effective as well.
Proper housekeeping must be set as a routine and part of each worker’s daily performance. Without it being part of the ongoing daily procedure it will never get done. To create an effective housekeeping program, there are three simple steps to get you started
- Plan ahead– Know who is going to take care of each area, what that person needs to do and what it should ideally look like.
- Assign responsibilities– Make sure there are specific people assigned to specific tasks
- Implement a program– Make it a part of the daily life at the office.
Reduce Wet or Slippery Surfaces
Agencies report that a significant amount of slip an fall injuries are a result of people slipping on walking surfaces. These include:
- Food areas
Weather has a way of changing the usually reliable parking lot into a slippery mess. A little rain can turn a normally dry hallway into a slippery mess when people walk by. Looking ahead and planning for these issues is something facilities need to do to prevent injuries.
- Keep sidewalks and parking lots clean and in good condition.
- When there is snow or ice, make sure they are cleared away, melted, have appropriate signs and in extreme cases block off access to dangerous areas.
Indoor control measures can help reduce the incidence of slips and falls.
- Use moisture-absorbent mats with backing material to prevent slipping at entrance areas.
- Make sure there are “Wet Floor” signs displayed as needed.
- Make sure spills are cleaned up immediately.
Avoid Creating Obstacles in Aisles and Walkways
Aside from the unseen obstacles there are plenty of completely avoidable obstacles that clutter hallways that people can trip over. Ensuring that these areas are clean and safe to walk through is the best way to avoid these accidents. Having procedures and policies in place and allowing time for cleaning the area, especially in places where scrap material or waste is a by-product of the job.
- Keep all work areas, hallways, service areas and storage rooms clean.
- Avoid stringing cords and cables across hallways or aisles.
- Avoid leaving boxes, files or briefcases in office areas aisles.
- Safe work practices such as closing file cabinet drawers after use and picking up loose items from the floor should be encouraged.
- Conduct routine inspections for trip and fall hazards.
Use Proper Lighting
Whether in industrial or office settings, proper lighting makes everything easier. People receive about 85 percent of their information through their sense of sight. Appropriate lighting, without glare or shadows, can reduce eye fatigue and headaches; it can prevent workplace accidents by increasing the visibility of moving machinery and other safety hazards. Good quality lighting also reduces the chance of accidents and injuries from “momentary blindness” (momentary low field vision due to eyes adjusting from brighter to darker, or vice-versa, surroundings).
Use proper illumination in walkways, staircases, ramps, hallways, basements, construction areas and dock areas.
- Keep work areas well lit and clean.
- Upon entering a darkened room, always turn on the light first.
- Keep poorly lit walkways clear of clutter and obstructions.
- Keep areas around light switches clear and accessible.
- Repair fixtures, switches and cords immediately if they malfunction.
Wear Proper Shoes
The shoes we wear can play a big part in preventing falls. The slickness of the soles and the type of heels worn need to be evaluated to avoid slips, trips and falls. Shoelaces need to be tied correctly. Whenever a fall-related injury is investigated, the footwear needs to be evaluated to see if it contributed to the incident. Employees are expected to wear footwear appropriate for the duties of their work task.
Control Individual Behavior
This condition is the toughest to control. It is human nature to let our guard down for two seconds and be distracted by random thoughts or doing multiple activities. Being in a hurry will result in walking too fast or running which increases the chances of a slip, trip or fall. Taking shortcuts, not watching where one is going, using a cell phone, carrying materials which obstructs the vision, wearing sunglasses in low-light areas, not using designated walkways and speed are common elements in many on-the-job injuries.
It’s ultimately up to each individual to plan, stay alert and pay attention.
Mike runs a plumbing business in Baltimore MD, he suspected that he was overpaying for his commercial policies, but it wasn’t until a year later when he switched insurers that his suspicions were confirmed. He was misclassified and was overpaying by $5000. It was only after we reviewed his policy that we found the error, fixed it and saved Mike thousands money in the process.
Mike’s experience is the exact reason why businesses need to review their business insurance policies every year. Errors made, especially by inexperienced insurers can cost businesses thousands and often aren’t caught for years. Not only that, but they also do a poor job of covering the very risks they’re paying to prevent. Even if the agent did a good job they do a good job the first time around, businesses constantly change and need new coverage.
Many businesses just don’t bother updating their coverage. One web design agency hadn’t updated their coverage for over 10 years, back when the owner was just a working with his personal computer out of his basement.
It’s not just the risk of being underinsured, many businesses are actually overinsured. Most insurance is sold using fear tactics – for only a few dollars a day, you are protecting your business from horrid possible outcomes. With a review you can actually see what insurance you need, not just what makes the agent more money.
It’s common for small businesses to start out with just the basics, such as commercial property and general liability policies. However, as they grow, there are many other types of coverage that get overlooked such as:
- Excess liability or umbrella – This coverage adds extra to the ceiling when the standard coverage isn’t enough.
- Workers’ compensation – This coverage is required in many states and covers medical expenses when a worker gets injured on the job.
- Professional liability –This coverage protects you from professional errors such as bad advice
- Commercial auto – This coverage protects your auto fleet or even if your workers travel to clients
- Employment practices liability – Coverage for HR issues, such as those related to termination, harassment, and discrimination laws.
- Directors and officers liability –Financial protection for directors and officers should they be sued for wrongful acts stemming from performance of their duties.
- Employee benefits liability – Covers liability issues from an omission or error in the administration of an employee’s benefits that results in the employee incurring a cost, such as a terminated employer losing benefits after not being providing with COBRA information.
Depending on your business, many of these insurances may be essential to adequately protect yourself. An annual insurance review is an ideal time to discuss these insurances, as well as your need for them, with your agent. Ensure the following elements are considered as you begin the review:
- Revenue – more business is good, but it also means a greater potential for liability. Have annual sales changed?
- Property – have you added equipment, computers, and such that would create a need to increase your commercial property policy’s limits?
- Location – your business owner’s or general liability policy could be impacted if you’ve added, closed, or moved locations.
- Travel – a hired and non-owned auto policy may be needed if your employees are frequently driving rented vehicles.
- Employees – have you had an increase in your workforce, turnover rate, or use of contractors? Consider employment practices liability insurance for high turnover rates. Workers’ compensation insurance may be a new requirement if you’ve added to your workforce.
- Services – are you offering additional services? For certain types of work, you may need additional endorsements to your general liability policy.
- Customers – are you serving new clients or industries? This may cause problems with your professional liability policy if you’re servicing high concentrations of high-risk clients/industries.
The above answers will be different for every business and usually won’t remain the same over the business’s life, and that’s why insurance isn’t a one-size-fits-all, unchangeable product. Take advantage of these attributes and annually review your business for exposures and insurance needs. Insurance may not cover everything, but it can certainly mitigate your risks. Start your annual business insurance review today by setting up a meeting with your insurance agent to discuss the above issues and how they relate to your current insurance needs.