The Average Small Business Liability Claim Now Costs $97,200

BURBANK, Calif., Dec. 16, 2025 /PRNewswire/ -- New national data shows that medical costs and other factors have led to a steep increase in the cost of liability claims. The new average claim cost for liability claims in the US is $97,200. This cost point is alarming, and it clearly threatens the survival of small businesses all across the US.

This data is sourced from the 2025 National Small Business Risk Index and released by USA Business Insurance. USA Business Insurance knows just how clearly this figure will impact the future of small businesses all across the US, since the company serves many small businesses nationwide.

A single claim of this size could easily put many small companies in the US out of business. Derailed growth plans, loss of rental space, foreclosure, or major setbacks are a clear reality for small businesses with large liability claims on the books.

The report highlights the growing problem of inflation all across the country, and it also demonstrates that the future of small business is under threat. Contractors, manufacturers, and even service-based companies cannot readily afford the costs of claims of this size.

Growing Risks for Small Employers in the United States

The data from the study showed that liability claims have increased in cost by 18% since 2022. Settlement costs are up, and increased litigation is bogging down the claims system while also driving costs through the roof.

Legal fees are now accounting for nearly 40% of the cost of claims. Five years ago, these costs only accounted for 27% of the cost of a liability claim.

Slip and fall incidents, as well as contractor injuries and property damage, are still at the top of the list for liability losses in the US. However, 1 in 3 small businesses in the US do not currently have the right coverage in place to withstand the increasing costs of liability claims.

The data shows that national trends, inflation, and economic pressures are going to impact businesses of all shapes and sizes going forward. The states with the highest average claim costs are California, Florida, Texas, and New York, but the entire country can expect to see increases.

Inflation and Claim Severity Are Far Outpacing Coverage Protections

One of the primary reasons that these figures are alarming is that many small businesses have never increased their policy limits despite their business growing and changing over time. This means that changes to the cost of labor, increasing costs for replacing materials, products, and machinery or tools, and increased legal fees will not be covered by their low policy limits.

The workforce is also changing, and companies are faced with hiring newer and less experienced staff members to replace the aging workforce that is slowly retiring and leaving their jobs. As retail is readjusting to in-person sales post-pandemic, accidents related to slips and falls are on the rise. Service companies are also facing increased costs for professional liability claims.

You can check out the risk profile for your state and industry in the report if you are concerned about how your business will be impacted. Your insurance agent can help you figure out what your correct insurance coverage should be in this new and shifting landscape.

QUOTES

Jaklin S. Senior Risk Analyst

"We're seeing claims today that would have cost $40,000 ten years ago now exceed $100,000. Inflation has quietly widened the gap between what businesses carry and what they actually need."

Sam Meenasian, Director of Client Services

"Small businesses form the backbone of the American economy. Our goal with this Index is to give owners clarity, so they're not blindsided by the financial impact of a major incident."

ABOUT THE NATIONAL SMALL BUSINESS RISK INDEX

The Index is published on an annual basis. This risk index takes a look at liability, property, cyber, and operational risks for US small businesses of all kinds. The index uses internal data, national claims statistics, and a survey of more than 2,500 small business owners to create its report.

ABOUT USA BUSINESS INSURANCE

USA Business Insurance is a national insurance agency that is headquartered in Burbank, California. Servicing commercial customers for more than 18 years, the company offers experience and licensing in all 50 states. The agency provides tailored business solutions for commercial customers working in many industries and business niches.

 More information is available at www.businessinsuranceusa.com

SOURCE USA Business Insurance Services, Inc.