Avoiding the Most Common & Costly Insurance Claims

According to Hartford Insurance Company, three of the most frequent insurance claims for businesses are burglary and theft, water and freezing damage, and wind and hail damage. However, the most common are not necessarily the ones that will cost your business the most. Those are: a vehicle accident, a fire or being sued for reputational harm.

Whether it's the most common claims or the most costly, there are simple measures that can help prevent your business operations from being disrupted.

Burglary & Theft

Burglary is illegally entering a secured building with the intent to commit a crime, especially theft. Businesses should mix playing defense with a healthy sense of paranoia when trying to prevent the theft of tangible goods whether through forced entry or employee dishonesty.

* Be sure your locks and dead bolts are in good working order and that both are used when closing shop. Be certain only those you trust have keys and change the locks periodically.

* Invest in exterior lighting and surveillance cameras on all sides of your property and check with the police department to see how often they patrol.

* Invest in an alarm system that includes doors and windows as well as motion detectors.

* Conduct thorough background checks on all new hires and be aware of sudden changes in employee lifestyles and conspicuous consumption.

* Conduct periodic inventory checks to ensure you are not experiencing shrinkage in your stock.

Water & Freezing Damage

The first thing to remember is that water entering the building from the outside is not covered in your business policy. Therefore, you should keep your valuable inventory on pallets and out of subsurface storage areas.

Again, be paranoid and think of how water could get into your building (blocked storm drain or gullies that are too close to your property). If you are worried about flooding due to your location, talk to your agent about buying flood insurance and discuss with a landscaper how to divert normal runoff. Also, talk to your agent about added coverage for backed up sewer and drains.

Roofs are the normal culprit for water damage, so have the roof inspected annually and be sure to clean roof drains and gutters twice a year, particularly after the autumn leaf drop. If workers have been on the roof, check to make sure they have not left behind water bottles or rags that can quickly block roof drains and cause flooding as well as unsafe roof loads.

Freezing is a different matter in terms of being covered. Damage from ice dams are normally covered but can be disruptive. Roofs should be cleared of excessive snow. Don't hesitate to hire a crew to safely remove ice and snow build-up before a rainstorm or thaw creates a problem.

Wind & Hail Damage

There isn't much you can do to protect yourself from wind and hail damage other than be certain loose objects are stored or secured, trees are trimmed away from your buildings and signs are bolted tightly.

Reputational Harm

The high cost of being sued for libel or defamation is largely due to legal defense. It seems anyone can make a claim that his or her reputation has been ruined, and the clock for lawyers starts running immediately. It would not be uncommon for attorneys' fees to exceed $10,000 or more.

Often, daims of reputational harm are either for unspecified damages, or accusers are swinging for the fences with high-dollar amounts. What often occurs is a settlement for an amount close to what it would cost the insurance company to defend the business. If the claims have merit, however, and can be proven, claimants may be in for a payday that may be covered by insurance. If the claim was based on an intentional act by a company representative, then there may be no coverage at all. What can you do to avoid such claims?

* Be nice. Don't let anger or competitive juices get the best of you. Give yourself 24 hours or a good night's sleep after writing an email or making a phone call when responding to stressful circumstances.

* Don't make unfounded claims when making comparisons with your competitors.

* When dismissing employees, be factual and stick to the violation of your policies and procedures. It's no time to make personal comments or air old grievances not associated with the dismissal.

* Avoid making any reference to behavior when a future employer calls for references. Simply acknowledge that the person was employed for a specified period of time and the position the person occupied.

* If you have any doubt that you are doing it correctly, call your attorney or an HR consultant for guidance.

Vehicle Accidents

The cost of vehicle accidents runs the spectrum of property loss or damage, medical costs and potential liability claims. There are several steps you can take to minimize your risk.

* Screen employees who you expect to be driving for work whether in your vehicles or theirs.

* Be clear you do not want people on the road when conditions prohibit safe travel.

* Be sure you are comfortable with your liability limits.

* If an accident occurs, swiftly get details about the accident and names of witnesses and all parties involved in the accident.

* Be sure company vehicles are in good repair, particularly tires, brakes and wipers.

Fire Claims

Preventing fire losses in your business means being vigilant all the time. Though it may seem like common sense, be persistent about the following safety measures.

* Be sure your sprinkler systems are checked annually, fire extinguishers are fully and currently charged, and smoke/carbon monoxide detectors are in good working order.

* Do not allow space heaters to be used as they can be overturned or left running over nights and weekends. Make the proper investments in adequate heating systems.

* Eliminate or minimize the use of extension cords. Not only can they fray and short, but they also pose a tripping hazard.

* Use only licensed electricians and periodically have your electrical systems checked on your roof, utility room and shop space.

* Train your employees regularly in fire prevention and life/ safety procedures should a fire occur. Be certain all exits are free of debris and all doors are easily opened to the outside. *