Burbank, California: Liability Claim Costs Surge
BURBANK, Calif., Dec. 16, 2025 /PRNewswire/ — Recent national research indicates that escalating medical expenditures and various factors have culminated in a significant upsurge in the costs associated with liability claims.
The current average expenditure for liability claims in the United States stands at a staggering $97,200. This figure raises urgent concerns, as it jeopardizes the viability of small enterprises throughout the nation.
Data emanating from the 2025 National Small Business Risk Index, released by USA Business Insurance, underscores the potential repercussions of this alarming statistic.
The agency, which caters to numerous small businesses across the United States, recognizes the substantial implications this will have for its sustainability.
One claim of such magnitude could potentially force countless small businesses into bankruptcy. Disrupted expansion initiatives, loss of leased spaces, foreclosure, and severe setbacks are stark realities for those grappling with large liability claims.
The report accentuates the gravity of inflation affecting the nation while also revealing the perilous future facing small business enterprises.
Various sectors—including contractors, manufacturers, and service-oriented firms—are ill-equipped to absorb the financial burden stemming from such exorbitant claims.
Growing Risks for Small Employers in the United States
Survey findings illustrate a troubling 18% escalation in liability claim costs since 2022. Increasing settlement amounts, coupled with burgeoning litigation, are not only encumbering the claims system but also inflating expenses considerably.
Legal disbursements now constitute nearly 40% of the total claim expenses, a significant rise from just 27% five years prior.
Prevalent liabilities—such as slip and fall incidents, contractor injuries, and property damage—persist as the primary culprits for financial losses in the United States.
Alarmingly, one in three small businesses currently lacks the appropriate coverage required to mitigate the ballooning costs of liability claims.
Nationwide trends, coupled with inflation and economic pressures, are poised to affect businesses of every character in the foreseeable future. California, Florida, Texas, and New York have recorded the highest average claim costs, yet similar increases are anticipated nationwide.
Inflation and Claim Severity Far Outstrip Coverage Protections
One of the salient reasons these statistics are disconcerting is that many small enterprises have failed to augment their policy limits, even as their operations evolve.
This oversight leaves them vulnerable to fluctuations in labor costs, escalating expenses associated with material replacement, and rising legal fees—all inadequately covered by their current policy limits.
Furthermore, the labor landscape is shifting, compelling businesses to recruit less experienced personnel to replace the departing seasoned workforce.
As retail sectors adapt to post-pandemic conditions, incidents of slips and falls are proliferating. Meanwhile, service companies are confronting elevated costs associated with professional liability claims.
For those concerned about the potential ramifications for their business, the risk profile for specific states and industries is accessible within the report. Insurance agents are equipped to assist in determining the appropriate coverage needed in this evolving framework.
Quotes
Jaklin S. Senior Risk Analyst
“We are witnessing claims today that once incurred a cost of $40,000 a decade ago now surpass $100,000. Inflation has subtly widened the chasm between what businesses maintain and what they genuinely require.”
Sam Meenasian, Director of Client Services
“Small businesses underpin the American economy. Our objective with this Index is to provide clarity to owners, thereby shielding them from the unexpected financial repercussions of significant incidents.”
About the National Small Business Risk Index
This index is published annually and encompasses an examination of liabilities, property, cyber, and operational risks pertinent to U.S. small enterprises. It utilizes internal data, national claims statistics, and insights from over 2,500 small business proprietors to formulate its conclusions.
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