Mitigating the Cost of Frequent Small Claims

How Small Claims Add Up

A single $2,000 property claim might seem insignificant, but multiple small losses over a few years can erode an organization’s claims history. Common examples include fender-benders in company vehicles, minor property damage, or slip-and-fall incidents that don’t lead to major payouts. Each incident adds administrative cost and raises red flags for underwriters evaluating renewal pricing.

Why Frequency Matters More Than Severity

Underwriters often view frequency as a stronger predictor of future losses than severity. An account with one large claim can sometimes be viewed as an isolated event. But repeated small losses—especially of the same type—suggest systemic issues in safety, maintenance, or employee training. Even closed-without-payment claims still appear in loss runs, impacting perceived risk.

Impact on Illinois Premiums

In Illinois, insurance brokers report that accounts with multiple small claims can see premium increases of 8% to 15% at renewal. This trend is particularly noticeable in property, general liability, and commercial auto policies. Carriers may also raise deductibles or apply surcharges to offset the higher loss frequency. Over time, the cumulative impact can significantly raise operating costs.

Practical Steps to Reduce Claim Frequency

Illinois organizations can take several proactive steps to reduce the number of small claims reported each year:

• Implement a formal incident reporting and root-cause tracking process.
• Review loss data quarterly to identify recurring issues such as unsafe areas or repeat drivers.
• Establish an internal deductible or self-insured retention for small property or auto losses.
• Provide regular employee safety and defensive driving training.
• Conduct pre-renewal loss reviews with your broker to discuss corrective measures.

Strengthening Your Renewal Strategy

To present a stronger risk profile to underwriters, organizations should document the steps they’ve taken to reduce future losses. Provide written summaries of training programs, maintenance logs, or facility upgrades that address problem areas. Brokers can use this documentation to advocate for better terms and minimize premium increases.

Real-Life Example

A Chicago-based property management firm struggled with repeated small water damage claims across several apartment buildings. After conducting plumbing inspections and setting a $1,000 internal deductible for minor repairs, the company reduced its claim count by 60%. At renewal, the insurer removed a surcharge and lowered premiums by 10% the following year.

→ Want to lower renewal costs next year? Ask us to review your loss runs and help you build a small-claims prevention plan.

Sources

1. IRMI – Claims Management Best Practices, 2024
2. Insurance Information Institute – Loss Control Insights, 2025
3. National Association of Insurance Commissioners (NAIC) – Commercial Lines Report, 2025
4. Illinois Department of Insurance – Annual Market Report, 2025

For many Illinois businesses and nonprofits, it’s easy to think that small insurance claims don’t make much of an impact. But in reality, frequent low-dollar losses can have a bigger effect on premiums than one large claim. Insurers track both the frequency and severity of losses, and repeated incidents can signal higher risk—even when individual claims seem minor.