Only One in Two Small Businesses in the United States
Have Liability Insurance
According to a study conducted by Hiscox, a prominent small company insurer, it was discovered that a significant proportion of small businesses in the United States, specifically 75%, lack adequate insurance coverage. Furthermore, the study revealed that more than 70% of these organizations possess a limited understanding of the scope and extent of coverage provided by business insurance policies. Business owners who possess inadequate insurance coverage are exposed to financial and legal responsibilities that extend beyond the limitations of their insurance policies.
The survey conducted by Hiscox on underinsurance involved a sample of 1,000 small business owners in the United States. The data collection took place over a period of twelve days, from July 11th to July 23rd, 2023. The main conclusions of the study are as follows:
The concept of a "small" business is far from its literal interpretation.
In the United States, a notable proportion of small firms, specifically 47%, that have maintained operations for a minimum of three years, have had a rise in revenue subsequent to the year 2021. Conversely, a slightly smaller percentage, namely 32%, have encountered a decline in their income during the same period.
A lot of people don't understand what their insurance covers.
Most small business owners don't know what their basic insurance policies cover. For example, 71% don't know what a Business Owner's Policy (BOP) covers, and 83% get the coverage of a General Liability (GL) policy wrong.
Three out of every four company owners would suffer financial losses in the event of an accident
In the United States, not only is there a startlingly high proportion of small businesses who do not have any type of basic insurance (35 percent of small firms do not have General Liability), but also 75 percent of small businesses are underinsured. 39% of the small firms in the United States who have been operating for ten years or more and carry general liability insurance have never renewed their policies.
"Buying business insurance is often seen as a checkbox exercise and a one size fits and covers all purchase," says Kevin Kerridge, CEO of Hiscox USA. "One size fits and covers all" is a phrase that describes the nature of the transaction. "This is a mistake that has the potential to be devastating and may bring a whole company to
its knees. Change is inevitable for all of us, and just like an old favorite t-shirt, it's quite improbable that your business insurance will still fit properly after a few years have passed. If a firm has expanded or undergone other changes, the owners are obligated to keep their insurance agent informed. In the same way that a company should never stand still, neither should an insurance company.
How to completely insure your business
As an entrepreneur, there exist several essential strategies that can be employed to ensure comprehensive protection. In order to make an informed decision on the purchase or renewal of insurance, it is advisable to conduct internet research or consult with a knowledgeable professional to ascertain the specific requirements of one's sector. Online platforms offer a plethora of valuable resources, including expert advice on selecting the most suitable insurance coverage for one's distinct company requirements.
It is advisable to inform your insurance agent about both positive and negative aspects of the situation. Failure to disclose or provide accurate facts on one's insurance application can lead to the nullification of the policy, rejection of claims, and possibly legal ramifications. Enhanced accuracy of information leads to improved efficacy of protection measures.
Regularly review and update your insurance policy at biennial intervals or in the event that your business undergoes a substantial alteration exceeding 20%. The growth and evolution of a business necessitate corresponding adjustments to its insurance coverage. In instances when a business has recently expanded or introduced new services, it is probable that its existing policy does not provide adequate coverage. It is advisable to inform your insurance agent in the event of any changes.
Source: Daily NewsFlash