ArticlesImproving insurance literacy among underinsured small businesses

Improving insurance literacy among underinsured small businesses

A majority of small businesses in the U.S. are underinsured, according to a new study by global specialist insurance provider Hiscox.

To reach its conclusions, the company surveyed 1,000 small business owners in the U.S. and asked participants questions identifying both the kinds of business insurance they owned and their familiarity with the most used policies. The most common insurance type reported by participants was general liability coverage, followed by property insurance, compensation insurance and professional liability insurance. Only 65% of respondents said they owned general liability coverage, which the study notes is a “foundational coverage that nearly every business, no matter how small, should have.” Hiscox also claims that 75% of the small business owners participating in the survey were underinsured as of this July, although the company does not provide a methodology for how this number was ascertained.

While the number of underinsured small businesses may need closer examination, a more important conclusion drawn from the study is the level of insurance illiteracy among small business owners. Out of the survey’s 1,000 participants, Hiscox notes that 71% were unaware of the coverage provided by a business owners policy, while 83% lacked substantial knowledge of a general liability policy.

Regardless of the coverage they need, insurance literacy is a must-have for small business owners. Not only will a better understanding of the options help them make better choices for their organizations, but it will also reduce the number of underinsured companies, ensuring that assets and livelihoods are well protected. The Small Business Administration offers educational resources for those looking to learn more about business insurance, including a four-step approach to purchasing a policy. The administration heavily recommends that entrepreneurs start the process by identifying the risks affecting their operations and finances the most. Rather than staying with one provider, small business owners should also assess their insurance options on an annual basis to ensure that their coverage continues to suit their needs.

ASBN Small Business NetworkASBN, from startup to success, we are your go-to resource for small business news, expert advice, information, and event coverage.

While you’re here, don’t forget to subscribe to our email newsletter for all the latest business news know-how from ASBN.

Colin Velez
Colin Velez
Colin Velez is a staff writer/reporter for ASBN. After obtaining his bachelor’s in Communication from Kennesaw State University in 2018, he kicked off his writing career by developing marketing and public relations material for various industries, including travel and fashion. Throughout the next four years, he developed a love for working with journalists and other content creators, and his passion eventually led him to his current position. Today, Colin writes news content and coordinates stories with auto-industry insiders and entrepreneurs throughout the U.S.

Related Articles