Practical. Principled. Approachable.

What are the top causes of business insurance losses in the U.S.?

On Behalf of | Nov 3, 2022 | Insurance Disputes

Disasters happen almost every day. When one of them affects your business, the damage can easily reach hundreds of thousands of dollars, if not millions. Your ability to stay in business could be threatened.

This is where business insurance comes in. After a natural or man-made disaster, your insurance company steps in to compensate you for your losses. At least, that is what your policy claims.

Business insurance covers a wide range of incidents and phenomena that can severely harm a Bay Area business. According to Allianz, natural disasters like tornados, floods, hurricanes and earthquakes have been the most common type of claim for American companies since 2017. Hurricanes, in particular, caused a huge number of business claims as hurricane season has become increasingly severe in the Atlantic.

The most common reasons for filing a business insurance claim

The next four most common reasons for filing a business insurance claim with Allianz over the past five years are:

  • Fires/explosions
  • Faulty workmanship/maintenance
  • Airplane collisions/crashes
  • Machinery breakdown

Though natural disasters were the most common source for a claim, fires and explosions were the costliest. Such claims accounted for 21 percent of the $13.9 billion in claims the insurance giant has paid out since 2017. Natural disasters, while making up more claims, cost just 15 percent of the total. Faulty workmanship and aviation accidents each cost about 9 percent of the payments, and machinery breakdowns cost about 5 percent.

As climate change continues to produce more and more extreme weather, claims related to natural disasters will likely become increasingly common in San Francisco. Businesses in California, with its wildfires, mudslides, droughts and earthquakes, are particularly vulnerable. But when an insurance company refuses to provide a reasonable settlement figure that reflects the damage its business client has suffered, legal action may be required.