90% of small business owners aren’t confident that they are adequately insured, according to survey

90% of small business owners aren’t confident that they are adequately insured, according to survey

Wil Chan
By Wil Chan
Jan 3, 2024
9 min read

It’s been a stressful few years to run a small business in America. Inflation, staffing shortages and keeping up with salary expectations continue to test business owners. It’s truly difficult to tell what’s coming next.

Despite the volatile business environment, 90% of owners aren’t completely confident they have enough insurance coverage for their small business, according to a new survey by NEXT Insurance conducted by Wakefield Research. Survey respondents included 500 small-business owners/decision-makers in the United States, with small businesses defined as companies with 50 employees or fewer. (For more on our analysis, see “Methodology” section at the end of this article).

The survey found that 96% of owners didn’t achieve a passing grade when quizzed about basic insurance knowledge. Nearly 30% don’t carry any small business insurance at all.

NEXT SMB Survey owners adequately insured

That should give all entrepreneurs some pause.

It’s no secret that small businesses are vulnerable to risk, but it’s clear not every owner feels confident about how to get the right protection.

53% of small business owners said their greatest barrier to getting insurance coverage is simply knowing what kind of insurance package their business needs.

What’s stressing out small businesses? Inflation and professional mistakes, mostly.

One issue still weighs on small businesses more than any other: inflation.

When the cost of materials goes up, business owners have less purchasing power and have to make the tough choice between increasing prices or absorbing more expenses.

But small businesses are also struggling as customers cut back on spending while recession concerns linger. And effects of the pandemic, like supply chain problems and hiring challenges, also haven’t disappeared.

  • 68% of small business owners told us that inflation is a top stressor for their business, as high prices continue to cut into their margins.
  • 42% of owners named reduced customer spending as a primary concern.
  • Almost 30% said supply chain issues remain one of their business’ biggest stressors.
  • 14% of owners cited labor shortages as a top issue.

What are the biggest risks to small businesses?

Unexpected accidents can happen to entrepreneurs in any industry — but all owners have a sense of which risks are especially dangerous to their small business.

  • 51% of small business owners said making a professional mistake is one of their biggest worries.
  • 39% of small business owners said an injury or illness that sidelines their employees would negatively impact their business.
  • More owners are watching out for digital threats: 36% of owners said that cyberattacks and data breaches are among their primary risks.

Location matters: Urban, suburban and rural businesses

What’s challenging businesses varies by location:

  • For example, more rural small business owners (71%) are concerned about inflation than suburban small business owners (64%).
  • 20% of urban small business owners are stressed over labor shortages, compared with 15% in the suburbs and just 6% in rural areas.

Are small business owners prepared for risks?

NEXT SMB Survey insurance basics

Many of the risks small businesses face fall under a term called “general liability” — referring to claims from someone else that your business has caused them harm. That could include a visitor injured at a business or a mishap costing customers money.

Claims like these are common for small businesses. Still, 96% of respondents did not get a passing grade — a C- or higher — on a knowledge quiz about general liability coverage. No respondent scored full marks.

NEXT SMB Survey business insurance coverage

Even more concerning? 29% of small business owners carry no insurance coverage at all.

Our survey found that more female business owners (35%) have no insurance coverage than male business owners (25%).

What coverage do small business owners have?

Small business insurance can come in many forms.

The small business owners we surveyed most often purchased general liability or a business owner’s policy, which is a combination of general liability and commercial property insurance.

Despite a significant risk of cyberattacks impacting their bottom line, only 10% of our surveyed businesses had cyber liability insurance coverage.

NEXT commonly purchased insurance graph

Do small business owners feel confident about their insurance coverage?

When it comes to business insurance, we found that many small business owners aren’t sure they’re making the right choices to safeguard their livelihoods.

NEXT SMB Survey insurance knowledge barrier

Many business owners told us they’re uncertain they have the correct coverage for their needs:

  • Just 10% of small business owners say they’re “completely confident” that their business is adequately insured.
  • Though more than half of business owners view professional mistakes as a major risk to their business, just 20% carry professional liability (E&O) coverage, and only half have general liability insurance.
  • 29% percent of owners don’t have any kind of business insurance protection at all.

Part of the problem is that insurance can be intimidating.

NEXT SMB Survey insurance vs taxes

Four in 10 business owners said it’s more stressful to understand insurance than taxes. And half of business owners said the complexity of business insurance made them worry they don’t have the right coverage.

How do small business owners plan to reduce risks?

The good news is that most owners are taking steps to safeguard their small businesses.

  • More than 80% of business owners are taking steps to better protect their businesses in the next six months.
  • 59% of small business owners are planning to review their current coverage or conduct a risk assessment to understand their insurance needs.

We found that more small business owners under 45 (41%) are likely to conduct a risk assessment than owners older than 45 (27%).

But just 1 in 3 small business owners said they would get help from a professional to better understand their needs.



The NEXT Insurance survey was conducted by Wakefield Research among 500 small-business owners/decision-makers in the United States, with small businesses defined as companies with 50 employees or fewer, between February 1st and February 10th, 2023, using an email invitation and an online survey.

Results of any sample are subject to sampling variation. The magnitude of the variation is measurable and is affected by the number of interviews and the level of the percentages expressing the results.

For the interviews conducted in this particular study, the chances are 95 in 100 that a survey result does not vary, plus or minus, by more than 4.4 percentage points from the result that would be obtained if interviews had been conducted with all persons in the universe represented by the sample.

This story was produced by NEXT Insurance and reviewed and distributed by Stacker Media.


Wil Chan
About the author

Wil Chan is a content writer at NEXT and has been a professional writer for more than ten years. His work has been featured in publications including Forbes and Greatist. He has run a freelance business since 2016 and feels passionate about helping self-employed people in all industries succeed.

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