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Survey finds most small businesses are underinsured or unsure of coverage

ERGO NEXT found 84% of respondents had to prioritize other expenses over insurance in the past six months, and 73% of small businesses may be underinsured for today’s key risks.

Reported · Written up by our desk · Industry & Deals

A new survey by ERGO NEXT, cited by Insurance Journal, found that while new small business owners are more likely to carry business insurance, most small businesses still face coverage gaps. The study estimates that 82% of new businesses operating less than one year have insurance, compared with 67% of businesses with one to five years in operation.

The survey also found that a quarter of small businesses surveyed did not have insurance at all, and about 14% said they were not sure what their policy covers. ERGO NEXT defined underinsurance as coverage that does not protect against a business’s most significant risks.

Economic conditions appear to be a major driver. Insurance Journal reports that 84% of respondents said they were forced to prioritize other expenses over insurance during the past six months amid economic uncertainty.

ERGO NEXT identified three main factors behind underinsurance: compliance requirements, cost pressures, and uncertainty about coverage needs. Phil Natoli, the firm’s vice president and chief actuary, said businesses evolve over time, so coverage may need regular review to keep pace with changes in risk exposure.

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