Increasing medical expenses and other factors have led to an uptick in the cost of business liability claims, with the average claim now costing $97,200. This is an increase of 18% from 2022, according to data from the 2025 National Small Business Risk Index.

These lofty claims can be detrimental to small businesses operating with fewer resources — potentially leading to derailed growth plans, loss of rental space, foreclosure and other setbacks.

Data from the study shows that increased litigation is also a significant driver of the increasingly high liability claims, now accounting for around 40% of claims costs. Five years ago, these expenses only comprised 27% of the average claim.
Slip and fall incidents remain the largest cause of liability losses, followed by contractor injuries and property damage. However, the report states that despite these risks, one in three small U.S. businesses currently lacks the proper insurance coverage to withstand the increasing costs of liability claims.

The trend of growing claims alongside inflation and economic pressures is likely to impact businesses of all sizes moving forward, especially, the report notes, in areas that already suffer the highest claims costs like California, Florida, Texas and New York.

According to an analysis by USA Business Insurance, one of the biggest reasons for the alarm surrounding these figures is that many small businesses have never increased their policy limits, even as their operations have grown. This means that in the event of a claim, some business owners may struggle to meet their obligations when their policy limits don’t cover changes to labor costs, increased material expenses or new equipment.

“Small businesses form the backbone of the American economy,” USA Business Insurance Director of Client Services Sam Meenasian said in a release. “Our goal with this Index is to give owners clarity, so they’re not blindsided by the financial impact of a major incident.”

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