As per a survey conducted by Insureon, 40% of small businesses have no insurance, and 75% of businesses are underinsured. Many small/medium businesses do not have insurance to cover expenses triggered by a natural disaster or lawsuit. In addition to this, if the unwanted occurs, the restoration time that follows can hurt the business owners even more.

A period of restoration is the length of time or duration needed to repair, rebuild, and replace the damaged properties concerning the business. Usually, a business interruption endorsement provides coverage for expenses incurred during the period of restoration; however, some basic or moderate insurance policies do not provide full coverage to such aspects.

As a business owner, it is ideal for you to understand the importance of each insurance policy format including the terminologies and practicality of the corresponding norms.

This piece of content provides a snapshot of incidents and insurance claims that business owners across the United States experienced from 2016 to 2019.

Natural disasters

In 2019, natural disasters inflicted losses up to $25.5 billion in the United States. While severe thunderstorms accounted for 80% of these losses, cyclones and winter storms accounted for 8 % of total insured losses.

Event Number of events Fatalities Overall losses Insured losses
Severe thunderstorm 49 70  $                       27,000.00  $                       20,300.00
Winter storms and cold waves 16 73  $                         7,400.00  $                         2,100.00
Tropical cyclone 5 16  $                         3,900.00  $                         1,900.00
Wildfire, heat waves, and drought 9 11  $                         1,300.00  $                             830.00
Flood, flash flood 9 7  $                       10,100.00  $                             200.00
Earthquake and geophysical 2 3  $                             180.00  $                               50.00
Total 90 180  $                       49,900.00  $                       25,500.00
Source: https://www.iii.org/fact-statistic/facts-statistics-us-catastrophes

Small business insurance survey findings

A survey conducted by Insureon conducted for small business owners highlighted the following pointers:

  • Business owners who came across an insurable event were greater than anticipated
  • 6% of women business owners were more likely to not report any incidents

Business owners who came across an insurable event were greater than anticipated

Small business owners have been coming across incidents that fall eligible for insurance claims. Some of these businesses are even facing multiple events.

As per the survey, over a 12-month period, 35.2% of businesses that encountered an incident did not file for insurance. The following assumptions could be the potential reasons for this:

  • These businesses were underinsured or were not insured at all
  • The overall incident cost is more than the deductible hence the incident was dealt with by the personal expenses
  • The concern or higher premium rates if a claim was filed
  • The eagerness of business owners to take an action considering the wait time for a resolution
  • Business owners on some occasions also prefer paying for the incident in one go rather than paying increased recurring expenses

Insurance carrier The Hartford’s list of the 10 most expensive types of claims are:

Insurance Claim Expenses
Reputational harm $50,000
Vehicle accident $45,000
Fire damage $35,000
Product liability $35,000
Customer injury or property damage $30,000
Wind and hail damage $26,000
Customer slip and fall $20,000
Water and freezing damage $17,000
Struck by object $10,000
Burglary and theft $8,000

 

18.6% of women business owners were more likely to not report any incidents

An expert assumption validating these numbers was that female business owners are less likely to have vigorous growth plans for their business. This greatly reduces vulnerability to insurance eligible incidents. Additionally, it was estimated that close to 50% of women-owned home-based business, this greatly reduced incidents like customer injury.

As a responsible business owner, be on top of the changing trends in commercial property insurance rules or policies. Have an in-depth understanding of what your business is eligible for and ensure that you have coverage from all the possible angles. Foreseeing incidents based on the evolving factors including climate and other geographical factors can turn out to be crucial. Having professional commercial insurance assistance is another lifesaver that can help you save both time and money.