Posted on: March 21st, 2017 by | No Comments

The impact of small businesses is anything but small. In the United States, there are approximately 28 million small businesses. These companies, according to the U.S. Small Business Administration, provide 55 percent of all American jobs and account for 54 percent of all U.S. sales.

The U.S. Census lists the payroll, employment, and other statistics for every American business.  A small business is categorized by its average number of employees in the last year or the average annual receipts over a three-year period. In addition, a small business:

  • Is organized for profit
  • Has a place of business in the U.S.
  • Operates primarily within the U.S. or makes a significant contribution to the U.S. economy
  • Is independently owned and operated
  • Is not dominant in its field or specialty on a national scale

As a fellow Iowa small business owner, Millhiser Smith has been helping our customers since 1928. We’ll protect your assets and ensure you’re covered. Our Millhiser Smith agents tailor insurance to fit your needs.

If you own and operate a small business, there are four broad types of insurance you should consider:

General Liability

This type of insurance protects you against a whole host of legal claims resulting from accidents, injuries, medical expenses, slander, libel, and bodily injury, among others.

Product Liability

If one of your products causes injury or bodily harm, this coverage safeguards you against financial loss.

Professional Liability

For small businesses that provide professional services, this insurance protects your company against errors, malpractice, and/or negligence.

Commercial Property

From wind to hail and vandalism to civil disobedience, property insurance shields you against a wide variety of events. You can opt for an all-risk policy or a peril-specific policy.

 

You worked hard to start a business. The experienced agents at Millhiser Smith will help protect your investment. As we customize your insurance coverage, it’s important to learn about the most expensive and most widely filed claims people make against companies.

None of us can predict the future, but Millhiser Smith can help you prepare you for it. Having the right combination of insurance plans will ensure you can keep operating, even after unplanned events and emergencies.

Following are the top 10 costly and common claims filed against businesses. They’re important to know as you decide what type of coverage is best for your own Iowa company. While many businesses worry about theft, there are other risks to your bottom line too. Let’s look at these ten and discuss some strategies for minimizing your risk.

 

Burglary and Theft

These claims represent roughly 20 percent of all small business claims, according to The Hartford. However, the cost per claim averages only $8,000. Though one-fifth of all insurance claims involve burglary and theft, the ultimate payout isn’t very large.

What can you do to minimize your risk for theft? Spend time recruiting and training quality people. Invest in background checks for all the people you hire. Install security cameras and other protective measures to guard your building. Implement cyber security programs too. People can steal information as easily as they can steal material items. You can also talk with Millhiser Smith about our risk management program for minimizing losses.

 

Product Liability

America is a litigious society. If you manufacture products, you can be held liable for any and all damage caused by your product. Look no further than McDonald’s lawsuits over the issue of scalding hot coffee.

Of all the business claims filed, five percent fall under the category of product liability. Claims average $35,000. You can pass every safety test, comply with every code, take every precaution available, and still be sued for liability. Alas, it’s the price of doing business in America. That’s why it’s critical you have ample coverage for product liability. The agents at Millhiser Smith will make sure we match your business needs with the appropriate insurance policy.

 

Fire

Ten percent of all small business insurance claims involve fire loss. The average payment for fire damage is $35,000. As with any loss, it’s important you understand the difference between replacement cost and the actual cash value of the damage. Millhiser Smith will shop our dozens of independent insurance providers to offer you the most comprehensive coverage.

Playing offense is always better than playing defense when it comes to your business. Make sure you install a code-compliant sprinkler system throughout your property. Conduct fire safety classes for all your employees. Post easy-to-read fire escape routes throughout your building. Take steps now to minimize your future risk.

 

Reputational Harm

Whether you’ve been in business a year or 50 years, your reputation is your calling card. It takes a long time to build a good reputation and just seconds to destroy it. About five percent of small business claims are for reputational harm; the claims average a whopping $50,000. This is far and above the most expensive claim for small businesses.

Why? Reputations are not tangible. They exist in the minds of your customers and prospective customers. If someone harms your reputation through libel, slander, or through an invasion of your privacy, it can take years and many thousands of dollars to remedy that breach. You may need to start from scratch to regain the trust of your clients, depending on the level of damage done.

You can take steps to lessen your chances of harm. Create a solid internet and social media usage policy for all your employees. Post this policy on the log-in screen for every worker. Assemble a team of trusted web and SEO strategists to monitor and respond to online threats. Draft an emergency plan for minimizing damage to your brand and business. Talk with Millhiser Smith about our coverage for reputational harm.

 

Vehicle Accidents

You may own one company car or a whole fleet of vehicles. No matter how many you need to conduct business, make sure you carry the appropriate coverage for your automobiles. Although fewer than five percent of small business claims are for vehicle accidents, the average payout is large, about $45,000. Vehicle insurance covers accidents on your property or any involving your own drivers.

In order to minimize your risk for vehicle claims—and to reduce your premiums—you can run background checks and driver history reports on any team member who will be driving for you. You may also provide training for safe driving and require your employees to abide by certain rules. Some trucking companies post an 800 number for other motorists to rate their drivers. Since you own the vehicles, you can install tracking devices that record distances and speeds. You can also introduce a culture of safety, both in your building and outside. No delivery is worth an injury or insurance claim.

 

Customer Slip and Fall

Perhaps one of the most important roles in your business hierarchy includes the janitorial staff. They keep your facility safe and clean. But even the most conscientious crew members can’t keep pace with every maintenance concern. And that’s when accidents happen. Ten percent of all small business claims involve slips and falls inside your business. Depending on the extent of the injury, customers can file a bodily injury claim.

Count on the risk management team at Millhiser Smith to assess your workplace. We can help determine potential risks. In addition, we’re OSHA experts. Trust our team of professionals to educate you about OSHA regulations.

You can make small, important changes to improve the safety of your business for clients and your workers. Install bright lighting throughout the building. Make sure you have a maintenance request program in place to take care of any potential hazards before they harm anyone. Be mindful of your flooring. If you have carpeting, make sure there are no gaps or bumps that could cause a fall. If you have tile or ceramic, pay close attention to drips and spills. In exterior spaces, install automatic lights and make sure there are no cracks in the concrete. Establish a plan for severe weather. Make sure you have someone on staff—or you hire someone—to clear snow and apply sand or salt to icy roads and sidewalks.

 

Wind and Hail Damage

No one can control the weather. But when a storm hits, you can feel reassured you carry insurance through Millhiser Smith. A full fifteen percent of small business insurance claims are filed for wind and hail damage and the claims average more than $25,000. If you have the right commercial property and umbrella insurance, you’ll have peace of mind.

You can make structural changes—upgrading your roof, windows, and doors—as well as procedural changes, including emergency and safety training for your employees. If you have clear safety instructions in place, everyone will know exactly what to do in emergencies. These precautions will help reduce future losses and injuries.

 

Water and Freezing Damage

Like wind and hail damage, water and freezing can wreak havoc on your small business. About 15 percent of all insurance claims are the result of broken pipes, floods, sewer backups, frozen pipes, and natural disasters. Millhiser Smith will assess your risks to determine the best coverage for your business. We realize that many commercial property insurance don’t include water damage. If that’s the case, we’ll recommend adding riders or supplemental coverage.

In addition to having the right insurance coverage, you can take steps today to lessen your chances for damage. Make sure to perform routine maintenance at your business site. Teach your employees how to shut off water valves in case of emergencies. Recruit some core team members to be in charge of emergency preparedness. Store valuables—including documents and photos—in safe places or off site. Have an evacuation plan in place.

 

Struck by Object

Fewer than five percent of all small business claims involve being struck by objects, however the average payout is rather hefty at $10,000. This indicates that objects can cause serious damage. We’ll make sure you have worker’s compensation coverage to protect you against these types of claims.

Make safety the main priority at your workplace. Take the time to properly train all your workers. If employees are in potentially dangerous situations, you can mandate that they wear protective clothing, hard hats, reflective vests, steel-toed boots, and always have the proper equipment and tools with which to do their jobs. At Millhiser Smith, we’re OSHA experts and can make sure you’re compliant. We’ll also ensure that you minimize risk in every corner of your business operations.

 

Other Customer Injury or Damage

While these small business claims constitute a small portion of those filed—less than five percent—they result in insurance payments of about $30,000. That’s a huge chunk of change and anything you can do to prevent this type of financial loss is to your benefit. Any bodily injury resulting from an accident at your small business might result in a lawsuit. In addition, claims can be filed if a party was hurt as a result of your advertising or your operations.

We highly recommend having a comprehensive general liability policy in place. We’ll discuss the specific coverages with you and ask you questions. As we talk, we may learn about new areas of your business that need extra protection.

 

Contact Millhiser Smith today to learn how our expertise and knowledge can protect you today and into the future.