Small Business & Insurance — Many Underinsured

Small businesses that have been in operation for awhile are much more likely to have the right amount of insurance than those that have been doing business for a longer period of time.

This comes from the business insurer, ERGO NEXT. It found 82% of businesses that have been working for under a year are properly insured. Just 67% of businesses with one-to-five years in operation have the right amount of insurance, or the right type of insurance.

Overall, 73% of small businesses are underinsured and not covered for problems they may face today.

Digging a little deeper, the ERGO NEXT report said 25% of small businesses aren’t insured at all. And 14% aren’t quite sure what their policy actually covers.

Or, and more sadly, what coverage they need.

To add definition to the survey, ERGO NEXT considers a business underinsured when coverage doesn’t cover the risks considered significant for that type of business.

Economic issues are also coming into play for many businesses as the economy has forced 84% of the small business respondents to prioritize and pick other needs over insurance.

ERGO NEXT vice president, Phil Natoli said three things are driving small business insurance decisions:

• Compliance requirements

• Cost pressures

• Uncertainty about coverage needs

The report noted: “Entrepreneurs unsure of what insurance they truly need may default to buying the minimums required by law. More than a third of small business owners (37%) say maintaining steady cash flow is a top source of stress.”

• 46% of respondents said the cost of insuring all their risks is why they aren’t covered

• 32% say they may have coverage gaps where additional coverage isn’t legally required

• 32% say insurance coverage is too hard to understand making coverage gaps hard to figure out or fix

“Businesses evolve constantly, but insurance coverage doesn’t automatically keep pace,” Natoli said. “As companies add employees, adopt new technologies or expand into new markets, their risk exposure changes. He advises agents to make sure to review coverages on a regular basis.

Source link: Insurance Journal — https://bit.ly/3Rw8we1