9+ Small Business Insurance Statistics & Facts [2023 Update]

Let’s start by reviewing some of the key small business insurance statistics.

Small Business Insurance Statistics: Key Numbers

40% of small business owners have no insurance at all.
75% of businesses are not adequately insured.
A general liability policy averaged $42 per month or $500 per year.
54 % of small business owners purchase general liability insurance.
76% of small businesses don’t buy insurance online.
7 million small businesses depend on commercial insurance to stay afloat.
52% of 3-9 employee small businesses do not provide health insurance.
31% of SMBs have cyber insurance.
Over the next decade, 40% of small firms will file an insurance claim.
Burglary and theft account for 20% of small business insurance claims.
6.6% of small business insurance claims are for property damage from fire, storms, or busted pipes.

Did you know that small businesses are the backbone of the US economy? They contribute to approximately half of the GDP (Gross Domestic Product) in this country.

Do you know if your business is properly insured? If it’s not, it could cost you in the long-run. Knowing how to choose the right insurance and how much coverage you need can be overwhelming, especially if you’re a small business owner.

Here you will get small business insurance statistics and tips to help you to understand the importance of small business insurance.

What is Small Business Insurance?

So what does it all mean? The short answer is that small business insurance will help protect your business from a variety of risks and losses. These may include liability, equipment and property, or other losses that can cripple a growing business.

If you’re not sure if you need it or how much coverage you require, the following section should help.

Small Business with no insurance

A startling 40 percent of small and medium-sized enterprises (SMEs) do not have any business insurance at all. That is an alarmingly high number, and if you identify as a small business owner, you are required to obtain business insurance for your own safety and peace of mind.

As stated in a recent article published by the Insurance Business Academy, “But just in case you didn’t figure it out, I’d like to be quite clear: acquiring the correct business insurance coverage is critical to the survival and future of any business.”

Business Insurance underinsured

This number can be rather scary for new business owners and entrepreneurs, especially those who are just starting out. After all, how are these businesses expected to survive if they are not adequately protected? It’s likely that they aren’t covered by insurance.

It is critical to have enough insurance coverage, regardless of whether you work from home or in a traditional brick-and-mortar establishment. However, it is critical that you spend the necessary time researching and understanding your alternatives when it comes to obtaining insurance for your own business.

The simple truth is that you must have insurance in order to operate your business with confidence. The knowledge that you and your staff are protected will provide you with piece of mind. You should make sure that you inflate your claims in order to avoid having to pay the difference out of your own pocket.

Small business insurance reliance

Small business insurance is a type of insurance that is designed to safeguard your company against financial losses that could have a negative impact on your day-to-day operations. According to statistics, many small businesses collapse within a few years of their inception if they do not have enough insurance coverage in place.

The bottom line is that commercial insurance offers the security for your business and its assets that you require in order to continue operating, but it is your responsibility as the business owner to ensure that you have adequate coverage.

Total Small Business Premium amount

Insurance is a subject that many people are uneasy with, and for good reason too! The insurance sector is a massive $314 billion dollar industry. Heaps of middlemen and brokers rake in large commissions from the distribution of insurance contracts. Though insurance agencies’ internet presence is still in its early stages, it is rapidly expanding and changing the insurance landscape, making it more convenient for customers who want quick and precise information about their coverage alternatives.

Small Business Health Insurance Statistics

52% of 3-9 employee small businesses do not provide health insurance.[9] While many small businesses in the U.S. provide health coverage for their employees, a significant percentage of small businesses do not offer health benefits to their workers.

This is especially true for organizations with three to nine employees. This data is rarely discovered on either side of the issue, thus it is unknown if these companies are actually incapable of delivering benefits to their employees. However, additional persuasive data shows that many small businesses fail to provide even minimal health insurance to their employees.

Average Small Business General Liability Cost

As a small business owner, it is critical to have the appropriate insurance coverage. When you stop to think about it, the expense of having to start your business again from the beginning due to a theft or disaster can be financially crippling, as you will lose all of the money that you have invested in order to get your firm up and running in the first place.

How expensive can it possibly be? It costs an average of $42 per month or $500 per year to maintain a general liability insurance coverage. It is absolutely worth it to invest in high-quality insurance coverage because the consequences of not doing so could be significantly more costly.

Number of Claim Expected to File by Small Business

This number suggests to us that running a small business is no cake walk. 2/5 of these companies will run into trouble with the IRS, and 4/10 will file a claim through their insurance company.

Small business insurance can help mitigate the risk of such problems arising, but it’s important to recognize what types of protection you need to have in place before trouble strikes. This way you can get back to business much sooner than you might otherwise.

Burglary and theft insurance Claim

As shown above, many small company owners are victims of burglary and theft. To prevent becoming a statistic, you should put in place processes and procedures to reduce theft. One option is to hire a security company to install an alarm system on your property. This makes stealing more difficult, if not impossible.

Take photos of your merchandise and assets and store them safely so you have proof of ownership in case of an emergency. Also, work with insurance professionals who understand small business needs and can develop insurance plans that fit those needs while keeping costs low.

Small Business insurance claim in property damage from fire, storm, or busted pipes

These numbers are representative of a national average, which indicates that there are likely to be some minor variances from one state to another in these figures. In New York, for example, you may expect property damage from fire, storm, or burst pipes to account for approximately 45 percent of all small business insurance claims filed there.

Overall, these figures provide small business owners with an understanding of how frequently these types of damages occur, as well as what may be done to mitigate their likelihood of occurring.

Where Small business claim insurance

Many small businesses are discovering that the Internet is an effective and versatile tool for managing their inbound and outbound insurance claims.

It’s great to see how digital media has greatly impacted how small businesses submit their insurance claims, as it saves them time, reduces the amount of paperwork they need to keep track of, and eliminates any potential delays caused by being stuck behind a desk all day.

Small Business General Liability Stats

Over half of small business owners – 54% to be exact – protect their companies with general liability insurance, which can provide a number of essential protections in the case of a lawsuit. It’s particularly important for any type of company with employees, as this type of coverage can help an individual person or family if they happen to be injured by an employee’s negligence.

Small Business Workers compensation purchase Stats

A successful small firm protects its most precious asset: its employees. Workers’ compensation insurance is a must, but not all small firms have it.

The cost and benefit of such coverage for a small business are among the elements that go into that decision. However, many small firms believe such insurance is unneeded and may be replaced by other coverage.

Where Small Businesses Buy Insurance

A new J.D. Power and Associates survey reveals how serious the issue is for the insurance industry “which implies it affects small businesses. Insurance firms lose money on non-selling policies, and small businesses lose access to vital protection as well as the savings that come with a solid policy”.

In an age when insurance can be purchased online in the time it takes to order takeout, it seems things have gone backwards if 76% of businesses are still conducting business the old fashioned way!

SMBs Cyber Insurance Stats

While cyber attacks continue to be a major concern for small businesses, it seems that more and more are taking precautions by purchasing insurance.

This in turn should discourage hackers from targeting these small firms, which could significantly reduce the incidents of cyber attacks in the future.

Commercial property insurance claims statistics

Business interruption claims continued to taper off with only 38% of respondents reporting increased claims

compared to 62% in Q3 2020 and 94% in Q2 2020

Final Thought

Despite the low cost of many policies, small business owners often decide to gamble on their business as opposed to paying for coverage. Nothing else counts except protecting the bottom line and providing coverage when it is genuinely required.

It doesn’t matter whether you’re a start-up or have been in a company for decades; there are numerous factors to consider when considering your small business insurance. A decent insurance policy should be suited to your company’s demands as well as your financial status and budgetary goals.

However, it is equally crucial to ensure that your current insurance coverage is sufficient in this regard as well. Regardless of what stage your company is in, there are steps you can take to guarantee that your SMB is appropriately protected.

Many small business owners are confronted with the challenge of selecting the most appropriate insurance policy for their needs and financial situation. Small business owners, unlike larger firms, may not have the benefit of a dedicated staff to handle all aspects of their business, such as marketing and personnel.