Common Small Business Insurance Claims and How to Prevent them.
If you are a small business owner you know that things don’t always go to plan, some things happen which are out of your control and have a big impact on the running of your business and your bottom line. Whilst you’ve got the insurance to help you out, you’d ultimately rather avoid the disruption to your business that these unexpected events can cause, that’s where having a good risk mitigation plan comes to play.
Given our limited resources it’s hard to plan for everything. Here are some of the most common BizCover Business Insurance customer claims, and tips on how to prevent them.
Theft is unfortunately common for small businesses, especially for shop fronts with glass display fronts. Often theft is a break-in through a door or glass window, but BizCover has also seen claims for break-ins through the ceiling of a property and even occurring at seemingly safe public spaces such as an Airport Business Lounge. In that case, the insured left their items unattended for a minute and had their business laptop along with some of their own personal items stolen.
While most small businesses can’t afford to implement the type of high security a big company can afford there’s a few things that you can do to minimise theft.
Firstly, making sure there is adequate lighting outside and/or inside the building after hours can go a long way in deterring break-ins as they are more likely to be seen.
Also, securing your building more thoroughly with suitable locks, an alarm system, heavier duty window screens or burglar resistant glass can help make your premise harder to break into. Use a store safe at the close of business each day to store cash or other particular valuables.
Lastly, if you are in a high crime area, consider using a private security service.
General property damage due to storms occurs often, especially in turbulent Australian weather. Many properties face the aftermath of a storm with leaking roofs, water damage to stock, and in many cases business face loss of machinery or electrical equipment after a power surge during an electrical storm.
In one case, an IT company on the outskirts of Sydney faced a $49,000 loss of their hardware and equipment after the storm caused water damage to their premises.
You can reduce the risk of a claim from a storm by regular maintenance to ceilings and roofs, as well as cleaning blocked drain pipes or any areas that are prone to flooding. If a storm is forecast, simply turning off computers and equipments at the power point can alleviate the risk of a surge.
Computers and Laptops
A claim that comes up all too often is for laptops or computers. The computer has become a vital part of operating a business and while not always the largest outlay, can make a sizeable dent in your pocket if you need to replace one. Computers are often the victims of spills, falls, theft and power surges.
One Small Business recently had to make a claim to replace their computer after it was knocked off the counter, a similar claim to an Advisory Firm after their laptop was knocked to the wall.
You can protect desktop computers from falls (and theft) by locking it onto the surface. Locks can cost as little as $20. You can also protect your machine by using keyboard covers and sleeves, some that can even protect against spills.
Also activating cloud or tracking features on you devices (such as Apple iCloud) can allow you to track your device if stolen.
Another common claim is Business Interruption: the loss of stock, due to a broken freezer or data loss from a broken or stolen computer etc. can mean that you can’t operate your business normally. An Interruption can cost a business significantly especially if the interruption is a lengthy one.
Just recently, an electrical blackout resulted in a $3000 claim for one shop as they couldn’t function without power. Another saw a claim of over $35,000 due to a no longer functioning freezer, due to the loss of stock as well as the interruption to the business.
While it’s impossible to fully prevent an incident which stops you from going about your business, creating response plans in the case of the loss of critical machinery, equipment or personnel can help alleviate the impact of the situation. This can be as simple as training multiple staff members to perform critical tasks, or in the case of the broken freezer, investing in a backup generator.
Another common claim seen all too often is for damage of a third parties property. In the last 6 months, BizCover has seen claims for broken and burst water pipes, damage to structure, and damage to client’s vehicles.
One client made a claim after a technician drilled into a footpath and burst a water pipe causing water damage to the property as well as cutting off the water supply. It’s not the only time BizCover has seen damage caused by drilling in the wrong place. One claim occurred after an electrician drilled through a wall destroying electrical heated cables.
Another claim was for a client’s car after it fell off the hoist, one for a damaged engine, and another for a client’s car after it was accidentally backed into!
While no business can 100% prevent claims from occurring, thinking about what claims are more likely to occur and taking steps towards preventing them can help reduce the chances of claims. Then using insurance as your back up plan to protect you in the case the worst does occur.