The Most Common Small Business Insurance Claims

Insurance is often an item business owners put off purchasing until an event occurs making it a legal or contractual requirement. In a past article, we took a look at 3 common events legally requiring insurance. However, millions of small businesses operate every day without insurance and they’re risking everything by doing so. In this article, we’re going to discuss the most common types of insurance claims faced by small businesses in America and the events that trigger them.

Small Businesses Claim Liklihood

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The Hartford
The Hartford Financial Services Group, Inc.

A few years ago, one of the largest commercial insurance carriers in the country, The Hartford, released a study that analyzed claims out of their small business insurance unit over the five-year period of 2010 through 2014. The results offer a sobering look at the risk America’s small businesses face and the potential effects and costs they face when they operate without insurance. Incredibly, the study found that 4 out of 10 small businesses, or 40%, will experience an event that triggers an insurance claim within any given 10 year period. Those are staggering odds by any measure especially considering that most entrepreneurs don’t believe they’ll ever need to use their business insurance.

The 5 Most Common Claim Types

#1 Theft

Number one on The Hartford’s list of most common small business commercial insurance claims isn’t all that surprising. Theft and burglary costs hundreds of billions of dollars per year and much of that is commercial in nature. As a result, 20% of the claims filed by The Hartford’s small business clients were for theft. However, if there’s a silver lining to theft and burglary related claims it’s that this is the least costly type of claim with the average loss being $8,000.

#2 Water Damage

I’ll be honest, this one surprised me. Maybe it’s because I’m originally from Southern California where the temperature never drops below freezing and we always seemed to be in a draught, but water-related damage made up 15% of the claims filed in The Hartford’s five-year sample. The most common culprits within this group were flooding from frozen pipes that ended up bursting as well as collapsed or damaged roofs from snow and ice accumulation. The average loss from this category came in at $17,000.

#3 Wind & Hail Damage

Another somewhat surprising cause, and tied with water damage, was claims for damage caused by high winds or hail. This category also made up 15% of the total claims analyzed. To understand just how devastating hail can be to a business, we can look at a hail storm that hit my grandmother’s home town of Golden Colorado. Occurring in May of this year, the storm caused an estimated $1.4 billion of damage. I personally witnessed multiple car dealers who had hundreds of cars virtually destroyed by the storm while visiting last month and the damage to a local shopping mall was so extensive that they’re considering demolishing it entirely. The average loss on wind and hail related claims for The Hartford’s customers was $26,000.

#4 Fire

This one shouldn’t surprise anybody. Making up 10% of the claims in The Hartford’s study, we all know how dangerous and costly a fire can be. In fact, fire is the third most costly claim, according to The Hartford, with the average loss amounting to $35,000. This also helps explain why insurance carriers will greatly increase insurance premiums for companies that lease office space that either lacks an adequate fire sprinkler system or with a system that is inoperable.

#5 Customer Injuries

We’ve all heard stories about customers who walk into a local restaurant only to slip, fall, and break an arm because an employee failed to clean up a spill on the floor. Injuries to a customer were the fifth most common and fifth most expensive small business insurance claim accounting for 10% of the total claims in The Hartford’s study with an average loss of $30,000. This is particularly sensitive scenario because, unfortunately, there is a high rate of fraud among reported customer injuries. As a result, being properly insured is often the last line of defense for a company against this unfortunate reality.


If you’re a current small business owner without insurance or an entrepreneur thinking about starting a company, hopefully this study, and the insights gained from it, will reprioritize insurance to the top of your list. At UnBrokerage, we want to make sure that every small business in America has easy and affordable access to the liability insurance they need to operate protected. We’re solving the biggest challenges that force so many companies to operate without insurance like making the entire quoting and purchasing process available online and allowing our customers to pay their insurance costs monthly on a credit card. And if you’re a current business owner who already has insurance, we’ve made it easy for you to transfer your current coverage to us so you can begin taking advantage of all the other great features our platform offers.