A recent survey by ERGO NEXT found that 73% of small businesses are underinsured, with 64% of insured businesses not covered for all major risks. The survey also revealed that 82% of new small businesses have insurance, compared to 67% of businesses that have been operating for one to five years.
Reasons for Underinsurance
The most common reasons for underinsurance include concerns around insurance costs, lack of legal requirements, difficulty identifying coverage gaps, and confusion about what policies are needed to protect the business. Many entrepreneurs are unsure of what insurance they truly need and may default to buying the minimum required by law.
Cost and legal requirements are also major factors, with 37% of small business owners saying that maintaining steady cash flow is a top source of stress. As a result, many entrepreneurs feel forced to make difficult decisions about which risks they can afford to address.
Importance of Regular Reviews
Regular reviews of insurance coverage are crucial to prevent coverage gaps from developing over time. However, only 37% of small business owners strongly agree that they regularly review and update their coverage as their company grows.
Original reporting: KEYT (Ventura/Santa Barbara) — read the source article.
