This includes claims that you have violated the privacy of others or committed libel or slander against them that has caused damage to their reputations. Oddly enough, reputational damages are often the greatest and one claim costs businesses $50,000 on average.
Our world of technology makes it even easier for reputational harm suits to come into play. For example, let’s say a NYC plastic surgeon is giving a new marketing plan a try. One great way to bring in new clients is to show his work on social media. But if he posts before and after pictures of past clients without their permission or consent, he could be sued for reputational harm.
Customers are injured all the time, making this one of the most common business insurance claims. Whether from slips and falls, pulling items off shelves on top of them, or countless other wild and crazy reasons, customers can be accidents waiting to happen. The problem with customer injuries is that the instant response is often to sue – even if the customer knows your business isn’t at fault.
Litigating or defending your business can be costly and the court costs and attorney fees remain even if your business is cleared of responsibility. The average cost of a customer injury or damage claim for small businesses is $30,000. That’s not something the average small business can easily absorb and move on from – especially if you’re facing claims from more than one customer.
Awarded damages can quickly put a company out of business. In March of 2016, a 64-year old woman tripped on the edge of an outdoor rug in front of a New York City hotel. She fell and injured her mouth and fractured her wrist. At the trial, the Plaintiff’s expert testified she would need continuous dental procedures, had sustained nerve damage, and would likely develop arthritis in the affected wrist. A Brooklyn jury awarded the Plaintiff $450,000 in damages.
Water and Freezing Damage
Ice dams form. Pipes burst. Bad things happen when winter weather sets in – and at surprising other times throughout the year. The damage from water and freezing events can be very costly for your business. Since most small businesses operate on a rather slim profit margin (because you are busy re-investing in your business to help it grow), one major loss in a brutal winter can be devastating.
And it is more common than you think as water and freezing damage is the second most common cause of damage for businesses. The fact that each incident costs approximately $17,000 only exacerbates the problem for businesses on budgets.
The average winter temperature in NYC in January is 27 degrees Fahrenheit. This is cold enough for exposed or poorly insulated pipes to freeze. Martina Restaurant on East 11th Street started 2018 with a flooded basement. Temperatures were low enough for ice to collect on the head of the sprinkler system. The damaged sprinkler triggered and sent water pouring into the basement below. Could your business bounce back from a similar scenario?
With widespread product recalls happening all the time – some of them due to devastating injuries being caused by products you may have sold in your store – it is more important than ever to make sure you have the right kind of liability insurance to protect your business from the potential financial fallout related to these recalls, injuries, and, sometimes, deaths.
There are three main types of product liability claims your NYC business may come across.
- Design Defect – If your kitchen accessory company designs a blender that isn’t designed with proper safety features and still makes it to the market, a wave of product liability lawsuits could be headed your way.
- Manufacturing Defect – This is the most common type of product liability claim. Let’s say you did design your blender with plenty of safety features in mind. However, an issue during manufacturing makes it less safe and an injury occurs. This opens the doors for a lawsuit.
- Inadequate Instructions – You design a perfectly safe blender and the manufacturer doesn’t make any errors. But you forget to include important portions of safety measures in the instructions. Injuries still occur, and you’re held liable.
Product liability claims remain within the top ten most common insurance claims and carry a hefty price tag of about $35,000 for each incident. In the event of multiple claims, which is often the case when products are recalled, those numbers can add up to staggering amounts of money very quickly.
Protect Yourself from Common Business Insurance Claims
Getting business insurance is an important first step for protecting your business. However, you need to dig down deeper and go beyond what a standard business owner’s policy (BOP) offers to get the coverage your business needs in today’s business climate. That is why it’s so important to work closely with an agency that understands your communities and the unique challenges businesses within your community face.
It’s true that small businesses rarely have piles of extra cash hanging out, unused, or shoved in the corner. You can’t afford to spend wastefully on small business insurance, yet, failing to get the right kind of coverage can be as devastating as going without insurance altogether. Look for policies that offer the right balance of coverage and costs and that fall within your comfort zone of risks. Most importantly of all, make sure you’re at least covered for the common business insurance claims listed above.