Business liability insurance is becoming more important than ever. Across the country, business owners are seeing liability claims grow in both frequency and cost, and the financial impact can be significant.
According to the 2025 National Small Business Risk Index, the average business liability claim now costs $97,200. This represents an 18 percent increase since 2022 and highlights a growing risk for businesses that may not have reviewed their coverage recently.
This trend is not limited to large companies. Small and mid-sized businesses are often the most vulnerable because a single uncovered claim can threaten cash flow, assets, and long-term stability.
Why Business Liability Claims Are Increasing
Several factors are driving the rapid increase in business liability claim costs.
Rising Medical Expenses
Medical costs continue to rise nationwide. When a customer, vendor, or third party is injured at your business, even a seemingly minor incident can result in emergency care, surgery, physical therapy, or long-term treatment. These expenses add up quickly and directly impact liability claim payouts.
Higher Legal Defense and Settlement Costs
Legal costs are another major contributor. Liability claims often involve attorney fees, expert witnesses, court costs, and lengthy litigation. Even when claims are settled out of court, defense expenses alone can be substantial.
Larger Jury Awards and Settlements
Courts are awarding more serious damages than in previous years, especially in bodily injury cases. This trend increases exposure for businesses with lower liability limits and places greater pressure on insurance coverage to keep pace.
Expanding Business Exposures
Business operations are evolving. Many companies now rely on subcontractors, delivery services, mobile operations, or increased customer interaction. If insurance coverage has not been updated to reflect these changes, coverage gaps may exist without the business owner realizing it.
What Rising Liability Claims Mean for Business Owners
With the average liability claim approaching $100,000, many businesses are underinsured without knowing it. If liability limits are too low, any amount above the policy limit may come directly out of the business owner's pocket.
Insurers are also responding to these trends by tightening underwriting standards, reviewing loss history more closely, and increasing minimum coverage requirements at renewal.
How the Right Business Liability Insurance Strategy Helps
Proactive insurance planning is essential in today’s environment At our agency, we help business owners strengthen their liability protection by
• Reviewing general liability limits to reflect today’s claim costs
• Identifying hidden gaps in coverage before a loss occurs
• Evaluating umbrella and excess liability insurance options
• Aligning insurance coverage with current operations and risk exposures
• Explaining how claim trends affect renewal premiums and coverage availability
Liability insurance should evolve as your business grows and as the risk environment changes
Why Business Insurance Reviews Matter More Than Ever
Many businesses purchase liability insurance once and never revisit it. However, rising medical costs, legal expenses, and claim severity make regular insurance reviews critical. A policy that worked five years ago may no longer provide adequate protection today.
An annual review helps ensure your coverage keeps pace with rising claim costs and changing business operations.
The Bottom Line on Rising Business Liability Claims
Business liability claims are becoming more expensive, more complex, and more damaging financially. With average claims now nearing $100,000, relying on minimum coverage limits or outdated insurance can leave your business exposed.
Now is the time to review your business liability insurance and confirm that it is built for today’s risks, not yesterday’s.
If you have questions about your liability coverage limits or want to understand how rising claim costs affect your business our team is here to help.