What Commercial Claim Statistics Reveal About the Frequency and Costs of Property Damage

2/1/2022 (Permalink)

Blog Summary: SERVPRO of Media highlights a study from The Hartford that outlines the most common and most expensive categories of commercial insurance claims, many of which are caused by property damage disasters.

Protecting a facility against water damage, fire damage, and storm damage is an essential part of doing business in a brick-and-mortar location. A property damage disaster can devastate a structure, delay the provision of services, and diminish ROI, potentially causing the enterprise to close down. However, it can be all too easy for business owners to fall into the mindset of “Disasters happen to other businesses but not to my business.”

For over twenty-five years, SERVPRO of Media has served the property damage restoration needs of the community, and the team understands just how devastating commercial property damage can be to businesses, big and small. To help business owners understand the possibility of property damage occurring at their facility, SERVPRO of Media is highlighting commercial insurance claim statistics that reveal just how likely a disaster is to strike.

The Connection Between Commercial Insurance Claims and Property Damage

According to The Balance Small Business, “In recent years, The Hartford analyzed data from claims filed by small business owners over a five-year period. The claims had been filed under more than one million property and liability policies. The analysis indicated that 40% of small businesses would likely incur a property or liability loss within the next 10 years.”

This study by The Hartford analyzed two factors — how frequently a type of claim was made and how much the claim cost. These categories are described as “claim frequency” and “claim severity.” The study identified the top ten most common commercial insurance claims and ranked the average claim size. The property damage-related statistics below provide business owners and property owners with a sobering perspective.

• Water damage and freeze damage: 15% of claims

Coming in at number two on The Hartford’s claim frequency list, water damage is a common problem that many businesses will face. On average, water and freeze claims cost $17,000. The Balance Small Business notes, “Businesses can avoid freezing losses by clearing roofs of snow and ice, training key workers how to shut off the water, and maintaining an adequate temperature indoors so pipes don’t freeze.”

• Wind damage and hail damage: 15% of claims

Storm damage falls just below water damage on the frequency list. Costing around $26,000 for the average claim, wind and hail damage can cause structural damage and enable water intrusion. Dead tree limbs and improperly anchored equipment can become destructive and deadly projectiles when lifted airborne by the raging winds of severe weather. If storms are in the forecast, businesses can mitigate wind and hail damage by pruning dead or dying branches from trees, securing equipment located outdoors, and reinforcing windows that could be shattered by hail or debris.

• Fire damage: 10% of claims

While fire damage is number four on the frequency list, it is number three in claim severity. The average fire damage insurance claim totals approximately $35,000, which is more than twice as expensive as a water or freezing damage claim.

Since fire damage can be so costly, prevention is crucial. The Hartford advises businesses to adopt an emergency preparedness plan and carry out fire drills, as well as test smoke detectors and fire extinguishers on a regular basis.

• Customer slip-and-fall accidents: 10% of claims

While not directly related to property damage, slip-and-fall incidents can sometimes be attributed to water damage. For instance, a customer might slip on a water spill that was not dealt with promptly or a slippery patch of moisture from a hidden water leak. These accidents can be costly. $20,000 is the average claim amount for a slip-and-fall incident.

How to Move Forward After Commercial Property Damage

With property damage issues falling in the top five most common commercial insurance claims, business owners need to prepare and plan for property damage, even while praying that such a disaster never strikes their building. Thorough preparation and periodic maintenance and inspection can go a long way towards damage prevention, unforeseen disasters can arise. When water, fire, or storm damage happens at Broomall, PA, commercial facilities, business owners can trust SERVPRO of Media to rapidly respond to the situation and provide damage remediation and cleanup services that allow companies to quickly resume normal business operations and recover financially.

To learn more about SERVPRO of Media’s commercial damage restoration services, call (610) 566-5720 or email office@SERVPROmedia.com