Small Business & Insurance — Many Underinsured

Every other year Hiscox does an under insurance survey for small businesses. It’s titled, the Underinsurance in Small Business Report and the 2025 conclusions won’t surprise most of you.

Small business has a 9% better understanding of their insurance needs than they did two years ago. However, still, 77% of small businesses do not have adequate business coverage. That’s up 2% over the 2023 numbers.

Hiscox USA CEO Mary Boyd said part of the reason — and despite a 9% better understanding of insurance needs — there continues to be a woeful misunderstanding of the terms and policies surrounding small business insurance coverage.

Awareness is one thing. Translating that into action is yet another. Here’s a breakdown:

• 74% of the over 4,000 respondents could not correctly describe what a general liability policy covers
• 83% didn’t fully understand professional liability coverage
• 77% misunderstood what their business owners policy covered

A huge percentage thought their professional liability coverage included property damage from fire or flood. A lot of those quizzed felt people slipping and falling at their business is covered under professional liability.

Boyd said this confusion leaves many companies at financial and legal risk.

“The more knowledge they have about the risks they face and how specific policies match up, the safer their business,” Boyd said. “As an industry, we must continue to help business owners understand the differences between policies, omit alienating jargon, and encourage them to let us know when their business has changed.”

The biggest concern from those polled is cyber insurance. The report said 75% of small businesses are exposed to cyber risks because of their online activity but 39% without cyber insurance feel it isn’t necessary. Another 30% believe their business is too small to be a target from cyber criminals.

The other part of the survey dealt with how small business is doing these days:

• 62% say revenue has grown in the last two years
• That’s up from 47% in 2023
• 51% are still worried about the economy and inflation
• 44% worry about an economic downturn
• 32% lose sleep over theft and property damage

Source link: Insurance Business America — https://bit.ly/49xCCo2