Credit: supamotion/Adobe Stock
Insurance claims can be costly as well as disruptive for small business owners.
The average cost varies widely based on claim type, but small businesses can expect reputational harm claims to clock in at around $50,000, while vehicle accidents average about $45,000. General liability defense can exceed $75,000 per case.
Understanding what’s covered by insurance as well as taking precautionary steps to help prevent claims from occurring in the first place can make a big difference. Smart devices can help monitor for problems while saving business owners valuable time.
“Water sensors that detect leaks and video cameras that monitor for slips-and-falls are just a few of the smart tools now available to help small businesses mitigate risk.” said Chris Jones, The Hartford’s head of small business, in a statement.
Here are the top five reasons for small business insurance claims, according to an analysis of The Hartford’s small-business claims from 2020 to 2024:
No. 5: Fire (10% of claims)
The average cost of a fire damage claim was $80,000 in 2025, making it the costliest small-business insurance claim. That price is up from $35,000 in 2015 (approximately $47,600 adjusted for inflation).
Business owners can help mitigate their fire risk by taking precautions like installing fire extinguishers or sprinklers, storing flammable products safely and maintaining their smoke detectors.
No. 4: Wind and hail (15%)
Wind and hail can damage businesses’ property, including company vehicles, leading to costly repairs.
Business owners can mitigate or prevent damage from wind or hail by pruning nearby trees, securing or storing items that could become airborne in high winds and conducting regular roof inspections and maintenance.
No. 3: Slip, fall or customer injury (20%)
The average slip, fall or customer injury claim cost $45,000 in 2025, the third costliest claim for small businesses. That cost is up from $20,000 in 2015, partly due to an uptick in claims as well as higher settlements and costlier verdicts.
Businesses can reduce the likelihood of a customer injury by cleaning up spills and leaks quickly, preparing for rain, snow and ice events and ensuring appropriate product safety management, like including warning labels and providing instructions.
No. 2: Burglary/theft (20%)
Burglary/theft was a top reason for small business insurance claims in 2015, and that remains unchanged today.
Small business owners can help deter burglary and theft by conducting background checks on employees, installing alarms and cameras and ensuring proper exterior and interior lighting.
No. 1: Water and freezing damage (20%)
The top reason for small business insurance claims over the last five years has been water/freezing damage. Water and freezing damage claims are the fourth most costly, averaging $35,000 per claim in 2025. They’re also on the rise, representing just 15% of claims in 2015 compared to over 20% now.
Business owners can help prevent or mitigate water/freezing damage by maintaining proper indoor temperatures when it’s cold out, clearing excessive snow and ice from roofs and installing water sensors that alert owners to leaks and temperature changes.
Photo credit: supamotion/Adobe Stock
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