Every year, small businesses must contend with a wealth of new and emerging threats, while also safeguarding their operations against the sort of risks that never go away. In this post we will look at some of the most common small business insurance claims that insurers expect to deal with in 2026.
What Claims Are Expected This Year?
In the current climate, insurers are expecting to be dealing with claims relating to:
- Cyberthreats using AI
- AI risks relating to data and intellectual property
- Property damage from extreme weather
- Property damage and business interruption as a result of deferred maintenance
- Liability claims
We’ll explore each of these in more detail below, and what you can do to help protect you and your business.
AI Brings Both Internal and External Threats
Cyber threats from AI tools
There is no question that your business needs cyber insurance. One study found that around 96% of all cyberattacks target SMEs. And as artificial intelligence (AI) tools get more powerful and accessible, it has never been easier for cybercriminals to target your business for phishing, ransomware, and other cyberattacks.
Data security, IP and reputational risk from AI use
But AI brings internal threats, too. Many businesses, eager to join the “AI revolution”, have started using off-the-shelf tools to create content, draft proposals, and process their data. This may expose some SMEs to certain unexpected risks.
Without proper governance, through using an AI tool a business may inadvertently:
- Breach intellectual property laws
- Leak private or confidential data
- Provide clients with bad advice or poor services
All of this could lead to costly claims, financial losses, and significant reputational damage.
While AI can help businesses move faster while saving time on admin, you must never take these tools for granted. Never lose sight of the importance of privacy and data confidentiality, and never release or share any AI-created content without first performing a thorough human review process.
And if a client ever makes a claim against you, make sure you have adequate professional liability insurance to cover any legal fees and other expenses that may arise.
Property Damage From Extreme Weather
Extreme weather events, such as storms, high winds, and flash floods, appear to be on the increase. Whether that is the case, the fact remains that property damage from adverse weather is an ongoing risk for any business that operates out of a brick and mortar premises. Regardless of whether that is a retail shop, an office, a bar, a restaurant, or a warehouse.
From backing up your business data to installing flood defences and sprinkler systems, there are many things you can do to help mitigate the damages from any possible incident. Yet it may prove impossible to prevent certain incidents, which is why your small business insurance should give you all the cover you need to make a full recovery.
Business buildings insurance can help you cover the costs of repairs following an incident. But you should also invest in business interruption insurance, which can cover your overheads during an extended period of downtime. And as recovery from an adverse event can take much longer than expected, you should aim to make your business interruption insurance liability period as long as possible.
Read our full guide to how small business insurance can provide vital peace of mind.
Deferred Maintenance: A Disaster Waiting To Happen?
In recent years, high inflation rates and ongoing supply chain issues have resulted in higher labour and material costs, along with longer lead times, for all maintenance, repair, and renovation projects. As a result, many SMEs may have deferred some essential maintenance tasks.
While deferring maintenance can save money in the short-term, in the long-term it could expose your business to a greater risk of fire, flood, subsidence, and downtime as a result of broken or faulty tools or equipment.
In the coming years, insurers may face more claims for repairs or business interruption as all of this deferred maintenance finally catches up with SMEs.
While it is understandable that SMEs will look to save money during uncertain economic periods, it pays to think in the long-term. Switch to a preventative maintenance schedule. The savings you make on deferring maintenance will pale in comparison to the eventual cost of repairs or replacements, or the higher insurance premiums that could follow claims.
Liability Claims – A Perennial Risk For All SMEs
Finally, all SMEs should protect themselves against potential liability claims. This is when an individual or an organisation makes a claim against your business on the grounds of negligence, professional misconduct, or similar.
Here are some situations that could result in a liability claim for your SME:
- An employee injures themselves on the job, or contracts an illness through their work.
- A member of the public, such as a customer, a contractor, or a delivery driver, trips or falls while on your premises.
- A client is dissatisfied with your work, and claims you have breached your contract or acted dishonestly.
In each of these cases, liability insurance can cover any compensation payments that may be due, along with any legal fees that may arise.
Public liability insurance can cover you for any claims arising from incidents involving members of the public, while professional liability insurance can cover you for any claims arising from clients relating to your work or conduct.
You also have a legal requirement to get employer’s liability insurance, which will cover you for any claims arising from your employees.
Talk To James Hallam About Your Small Business Insurance Needs
James Hallam is an independent Lloyd’s broker with a dedicated team of experienced insurance professionals who are committed to getting you the cover you need at a price you can afford, no matter what challenges the next few years may bring.