Small business owners are critical to the U.S. economy, but sadly if a business isn’t adequately protected with the proper insurance, they can lose it all. According to small business insurance expert, John Kinney, a small business has 40% chance of seeing a property or liability claim in the next 10 years. If like myself, you are a small business owner looking to protect yourself from claims and ultimately losing the business that you love and continue to work so hard for, you’re in luck. Small business insurance experts John Kinney and Stephanie Bush joined me for an interview recently to discuss the most common and costliest claims, how these incidents can impact a small business and what you can do to prevent a claim from ever happening.
Candace Rose: What are the most common and costliest claims?
John Kinney: “One of the things that a lot of small businesses believe is they’re never actually going to have a claim. What we did is – we insure a million small businesses across the country and we dove into our data, and we looked at five years worth of claim data. What we came to realize is just in the property and liability space, that a small business has a 40% chance of just seeing one of those two types of claims in the next 10 years. We dove deeper and said ‘What are the most common?’ ‘What are the most expensive?’ We realized it’s pretty consistent across the country in our data the most common three types of claims are burglary and theft, water and freezing, and wind and hail. However, those are not the most expensive. The most expensive ones we see across the country are reputational harm, vehicle accidents, and fires. It was eye opening to us and certainly eye opening to our small businesses that we insure because again, a lot of them think they’re never going to see one.”
Candace Rose: How can these types of incidents impact a small business?
Stephanie Bush: “They can definitely impact a small business, so as John mentioned, it’s most important that small business owners understand that the likelihood and probability of them having a claim is real. But then there’s three basic principles that we suggest and that we stand behind in terms of working with small business owners.
The first one is around preparation, to prepare and make sure that they take those cautionary steps to prevent or to minimize a claim. That can be as simple as making sure that their sidewalks are clear to prevent and minimize slips and falls, making sure that they have smoke detectors, making sure that they have a burglar alarm or adequate interior and exterior lighting. Those are some simple steps that they can take to help them prepare.
Secondly is to make sure that they are adequately protected to obtain the appropriate council from their local independent agent, and make sure they have the right coverage for their business. What a florist needs is very different from what a local contractor or the local lumberyard may need. So again, that local independent agent can really work with them to make sure that they have the right coverage.
Finally, because it is likely that they will have a claim, make sure that they are well positioned to prevail, to get back up and running as quickly as possible, reduce their burden, begin to satisfy and meet the needs of their customers in their local community. Small business in America is so critically important. There’s more than 28 million small businesses in the United States and they employ about half of all private sector jobs across the country and are also a significant generator of new jobs in the U.S., so really making sure that small businesses prevail is critically important.”
Candace Rose: What if you have a small business at your home and you have clients coming in and out. What can you do to protect yourself and your property?
Stephanie Bush: “Again, I would go back to that second point around protection, working with their local independent agent to make sure that they have the right coverage and that they follow the appropriate steps depending upon what their business is – if they’re what we call a high traffic business (if they have a lot of people coming in and out) or if it’s something as what John had referenced around if they would be subject to more reputational harm and putting their business as being electronic or digital and internet, so really making sure that they’re adequately protected.”
Candace Rose: Are there any additional steps that business owners can take to protect themselves from potential losses?
Stephanie Bush: “I would ask that they go to TheHartford.com/LossControl. When they go there they’ll see tips and insights around property, liability coverage, insurance, around safety tips and where they can find their local agent in their community.”