Companies, regardless of size, must have business insurance to cover the costs of potential liability and property damage claims. Despite exercising care and due diligence in every business activity, accidents and issues may still crop up and expose your venture to potential claims and lawsuits. That’s why most states require entrepreneurs to purchase general and specific policies, depending on the industry.
A US-based financial services firm, which also operates an office in Canada, conducted a five-year claims analysis to determine the most common and costliest business insurance claims filed within five years. The study discovered that 40% of companies are at risk of losses from liabilities and property damage within a decade of operations.
Firms may get industry-specific liability coverage and general business insurance policies to safeguard their organizations. To determine which ones to get regardless of your firm, consider the following most common insurance claims:
1. Burglary And Theft
About 20% of the businesses involved in the survey were affected by losses from team members and outsider-initiated activities. A considerable number of organizations have reported losing inventories due to dishonest employees. Conversely, most external losses were attributed to break-ins.
To discourage internal staff from committing such crimes, it’s essential that they get paid and treated well. You may also opt for an insurance policy covering insider theft and forgery. More importantly, invest in high-quality security and surveillance systems to discourage would-be thieves from pushing through with their plans. Conducting thorough background checks on applicants may help deter robbery and other heinous crimes.
2. Water-Related Damages
Physical losses can be inflicted by severe weather conditions and natural disasters such as flooding, heavy snow, and problems in the plumbing system, such as frozen or burst pipes
Insurance providers often cover water-related damages from most common sources, except flooding. However, you may purchase business income protection to maintain your cash flow even if your physical store must close during restoration activities. To prevent snow and plumbing system issues from wreaking havoc on your organization, hire professionals to clean your roof regularly, especially after a heavy snowfall. Additionally, immediately call a plumber and turn off the main pipelines as the leaking starts. It also helps maintain proper indoor temperatures to prevent pipes from freezing during the winter.
3. Damages From Wind And Hail
Strong winds can also topple trees and damage your roof, while flying debris may destroy your brick-and-mortar shop’s walls and other sections. Individuals, including customers and your staff, may also be vulnerable to injuries from wind and hail.
While there’s no foolproof guarantee to prevent such accidents, taking a proactive approach is necessary. Besides getting business liability coverage for third parties, owners must have their staff covered by workers’ compensation insurance. More importantly, a commercial property policy will prevent organizations from paying hefty out-of-pocket repair costs. In addition, it’s a wise idea to keep trees trimmed and have an anti-shatter film for glass installed on your windows and doors.
4. Fire Damages
There’s a fire happening in any of the locations in the United States every 23 seconds, according to the National Fire Protection Association (NFPA). Structural fire occurs every 64 seconds, while a residence may be partially or wholly gutted by flames every 89 seconds. In 2020, about 1.3 million fires were reported to local fire departments, resulting in 3,500 deaths, 15 200 civilian injuries, and almost USD$ 22 billion in property losses.
As a preventive measure, ensure that your electrical system works well and have your staff trained in proper fire response. More importantly, have your pieces of fire suppression equipment ready and have commercial property insurance coverage activated to safeguard your business against fire-induced losses.
5. Guest Slips And Falls
Customer slips and falls may be more common than you think. About five per cent of businesses have reportedly experienced the unfortunate incident of having guests and clients trip and slip on their premises.
Businesses must ensure their premises are organized and safe to reduce these risks. Wet and slippery floors, uneven surfaces, and improperly stacked goods must be avoided at all times. Additionally, general liability insurance coverage can save you from paying hefty medical bills or settlement costs.
Other Common Claims
Clients may be injured in other ways, not only inside business premises. For instance, they can file a complaint if your product was found defective and has caused some damage to them or their family members. Such is called product liability claims. Depending on the losses incurred, a complainant may ask for a costly settlement, mainly if the product caused the loss of lives, as is the case with defective vehicles.
Organizations may also be liable for accidents where a customer or third party gets injured from their company vehicles. The commercial auto insurance must be in place to help cover medical and repair costs.
Concluding Thoughts
Businesses need stable revenues to develop and thrive. Unfortunately, they might have to pay thousands, if not millions, in settlement money if they get embroiled in a severe accident. Moreover, these firms may lose more potential income while recovering from such incidents.
In these instances, business liability and income insurance, alongside other specific coverages, can help companies tackle the problem without hurting their bottom line.
