Hiscox, the leading small business insurer, found that 75% of small businesses in the US are underinsured, and over 70% do not understand what business insurance covers. An underinsured business leaves business owners financially and legally liable for costs beyond insurance limits.
The Hiscox Underinsurance Survey surveyed 1,000 small business owners in the US between July 11th and July 23rd, 2023. Key findings include:
- “Small” business is anything but: in the US, 47% of small businesses who have been in business for 3 or more years have had a revenue increase since 2021, and 32% have seen a decrease.
- Widespread misunderstanding of insurance coverages: the vast majority of small business owners do not know what basic insurance policies cover; 71% not understand what a Business Owner’s Policy (BOP) covers, and 83% fail to correctly describe a General Liability (GL) policy’s coverage.
- Three out of four business owners would be left out of pocket in an incident: not only is there a strikingly high number of small businesses without any fundamental insurance (35% who do not have General Liability), 75% of small businesses in the US are underinsured. Of the US small businesses who have been operating for ten years or more, 39% have never updated their General Liability insurance.
“Buying business insurance is often seen as a checkbox exercise and a one size fits and covers all purchase,” says Kevin Kerridge, CEO of Hiscox USA. “This is a potentially catastrophic mistake and could spell the end for a business. Change happens to the best of us, and like a favorite t-shirt, it’s unlikely business insurance is going to fit after a few years. Owners should always let their insurance agent know if their business has grown or changed. Just like a business, insurance should never be stagnant.”
How to make sure your business is fully insured:
As a business owner, there are some key ways that you can stay fully protected:
- Before buying or renewing insurance, research the needs of your specific industry online or speak to an expert. You can find some great resources online, such as recommendations for what insurance you need for your unique business.*
- Let your insurance agent know the good, the bad, and the ugly. Omitting or misrepresenting information on your insurance application may result in policy invalidation, claim denial, and potential legal consequences. More accurate information means more accurate protection.
- Update your insurance every two years, or if your business has changed by more than 20%. Business insurance should grow and evolve with your business; if your business has recently expanded or has launched a new service, it is likely that it is not covered by your current policy. Let your insurance agent know when something changes.