75% of Small Businesses Are Underinsured According to New Survey

According to the 2023 Hiscox Underinsurance in Small Business Report, which surveyed 1,000 small businesses last July, just about half of small businesses’ revenues are on the rise.

47% of small businesses surveyed have experienced a revenue increase since 2021. 32% have had a decrease in revenue.

Those businesses that have expanded in the past two years may now be underinsured, while those that have seen revenues drop may be paying more than they need to.

The 2023 Hiscox Underinsurance in Small Business Report “gauges US businesses’ protection against potential lawsuits and claims, as well as testing their understanding of insurance policies.”

The survey found widespread insurance illiteracy and a nationwide underinsurance crisis, leaving small businesses open to loss risks ranging from property damage to lawsuits.

Of the small businesses participating in the survey, 75% of small businesses in the U.S. do not possess sufficient insurance.

The type of coverage most businesses have is also important. When asked what kind of coverage businesses had, this is what Hiscox found:

• 65% had general liability coverage
• 45% had property insurance
• 35% had worker’s compensation insurance
• 32% had professional liability insurance

Of those businesses that had coverage, 68% of those with coverage purchased it because they were concerned about the consequences of a potential claim. Only 20% noted they purchased insurance because a vendor or partner mandated it.

A growing business is a good thing but it’s important to be sure your insurance coverage keeps up. The importance of working with a knowledgeable insurance broker is paramount. And not only a broker that is knowledgeable, but one who is proactive and continuously working with your business as it grows to ensure coverage is tailored to meet the risk exposures that come with expansion.

Have questions about your business insurance?

See: 2023 Hiscox Underinsurance in Small Business Report