How a tiny pothole created a huge liability problem

In the lawsuit, the property owners are accused of failing to maintain the premises in a reasonably safe condition or warn customers of the danger.

While potholes may be less common in certain regions, missed elevation changes frequently lead to claims — particularly in high-foot-traffic environments such as gas stations, making Commercial General Liability (CGL) Insurance a crucial protection, says Christian Nuelle, a Burns & Wilcox commercial insurance underwriter in Tampa, Fla.

"Convenience stores and gas stations specifically are a class of business where we see a lot of slip-and-fall claims," Nuelle says. "Whether it is a curb or a crack in the pavement, any part of the property that has defects can pose a hazard for bodily injuries."

Parking lot hazards often overlooked

The Florida lawsuit alleges the gas station owners failed to conduct proper inspections that could have revealed the pothole hazard and prompted its repair, according to the local news report. Regular inspections are important and should include a review of exterior areas, Hernandez says.

"The parking lot is oftentimes the most under-looked-at portion of a business. You have to account for it," he sys. "There is always the inherent possibility of a claim, but how you are maintaining the property matters."

Inspections should be supported by internal systems that allow employees to report hazards and management to act quickly. "With this pothole, for example, how long was it there?" Hernandez says. "Did an employee know about it and did they inform management?"

Business owners should also take note of any safety recommendations made by their insurance carrier when purchasing CGL Insurance, Nuelle adds. This could include fixing uneven asphalt or adding handrails.

"In order to secure coverage, there is often an inspection," he says. "If the carrier makes recommendations, they should comply with those to help avoid losses. In the event of a claim, they can at least show that they did their due diligence. They are covering their responsibilities as a property owner as best they can at that point."

From medical expenses to legal defense, costs can add up quickly after a fall incident, Hernandez says. "Depending on their line of work, the injury could affect their ability to work," he says. "On top of that, the possibility of another accident happening rises if the hazard is not addressed properly."

When small defects lead to major losses

Beyond maintenance oversights, rising claim severity has become a growing concern for premises liability risks. Late last year, a jury in Florida awarded more than $11.3 million to a woman who sued Target after tripping on an uneven surface in the store's parking lot in 2019 and suffering multiple fractures.

So-called "nuclear verdicts," a term used to describe jury awards of $10 million or more, are on the rise, though they are more common in some states than others, Nuelle says. It is a factor that can play a role when selecting liability limits on CGL Insurance and Excess Liability Insurance policies.

See also: Top insurance litigation 'hellholes' in 2026

"It is important as a business owner to know the legal landscape of the state in which you operate," he says. "If you are in a state that does have higher-than-average verdicts or payouts, you need to carry the proper coverage that would help you protect yourself."

Excess Liability Insurance "adds an extra layer of protection," Hernandez says. "It can give the business owner peace of mind."

Medical costs alone can be a significant driver of slip-and-fall expenses, according to Nuelle, who recalled a slip-and-fall claim at a convenience store that resulted in medical costs of more than $200,000. "It is not only the medical bills, but they can also sue for pain and suffering in excess of the direct damages," he says.

Those escalating costs are why even relatively minor repairs can help avoid far larger losses, Nuelle adds. "It may cost a few hundred dollars to fill a pothole, but if someone falls and there are high medical bills and pain and suffering, that can cost tens of thousands to hundreds of thousands of dollars," he says.

"Maintaining the property and keeping it in a safe condition can ultimately save them from a heavy financial burden."

Frequency of claims, policy nuances

While CGL Insurance is designed to respond to incidents like slip-and-falls, claim frequency can lead to lasting consequences. A business that has multiple fall claims costing $1 million each in a two- or three-year period, for example, could see rate increases or eventually become uninsurable, Hernandez says.

"If you are not maintaining your property and start having these kinds of claims, you risk the potential of being non-renewed," he says. "That is one of the biggest issues that we see."

When purchasing or reviewing CGL Insurance, business owners should pay close attention to policy terms. Exclusions for medical expenses, for example, would be "a big red flag," Hernandez says. Assault and battery is another possible exclusion.

"When you are running a gas station with high foot traffic, there may be times when unruly customers come in and cause an altercation," Hernandez says. "Most policies have an exclusion for assault and battery, and many business owners just do not think about that."

They should also find out whether defense costs are covered inside or outside of their limits, Nuelle says.

"It is important to know the language of your policy and if defense costs will reduce your available coverage limits," he explains.

Lease agreements should be reviewed carefully to determine who is responsible for exterior maintenance and whether Excess Liability Insurance is required.

"Some leases place responsibility for maintaining the property on the tenant, and for others it is the building owner," Nuelle concludes. "It is also important to have proper lighting throughout the property."

This article was first published on Burns & Wilcox and is reproduced here with permission.

(Featured image credit: helivideo/Adobe Stock)

See also:

• Most expensive premises liability verdicts
• Swiss Re: More consumers now comfortable suing insurers