A recent report spotlights a concerning issue within the small business landscape – despite their growth and achievements, a significant majority of them are inadequately insured. The report, released by Hiscox, a specialized insurance company, unveils that 75% of small businesses lack the necessary insurance coverage, leaving them exposed to various risks. Here are the key findings and recommended actions:
Insurance Coverage Shortcomings:
- Only two-thirds of small businesses possess general liability insurance, leaving the remaining third susceptible to lawsuits related to bodily injuries, property damage, and personal/advertising injuries.
- Fewer than half of small businesses safeguard their physical assets, such as machinery, equipment, and tools.
- Just one-third of small businesses carry workers’ compensation insurance, which is compulsory in most states, potentially leaving injured workers without the essential benefits.
- Even fewer businesses invest in professional liability insurance to protect against claims of professional errors.
- Many business owners do not have a comprehensive understanding of what their insurance policies cover, with fewer than one in five accurately describing the coverage of a general liability policy.
- Some business owners are surprised to learn that their property insurance does not include coverage for damage caused by earthquakes or floods.
Motivations for Insurance Purchase:
- Over two-thirds of business owners procure insurance out of concerns about the potential consequences of uninsured losses, while only 20% do so due to legal or partnership requirements.
Seeking Professional Guidance:
- Seven out of ten business owners rely on insurance agents for their expertise when purchasing coverage.
- More than half of business owners find agents to be the most valuable source of information.
Recommended Actions: To ensure they have sufficient insurance protection, the report suggests three critical steps for small business owners:
- Research and Consultation: Prior to purchasing or renewing policies, conduct thorough online research or seek expert advice from an insurance provider.
- Accurate Information Provision: When interacting with an insurance provider, offer complete and precise information about your business to secure the right coverage.
- Regular Insurance Evaluation: Review your insurance program at least once every two years, and more often if significant changes occur in revenue or payroll. Businesses evolve, and so do their insurance needs.
Key Takeaway: Inadequate insurance can put your hard-earned business at risk. Adequate coverage is essential to safeguard your most valuable asset: your business.
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