Hiscox: Nearly Four in Five Small Businesses in the U.S. Aren’t Protected Against Claims

Hiscox Survey reveals pervasive underinsurance and insurance illiteracy across the US

Atlanta, GA — November 10, 2025 — Hiscox, the specialist global insurer, found that 77% of small businesses in the U.S. are underinsured, which has increased by over 2% from 2023. This is in contrast to their understanding of foundational business insurance, which has improved by 9% in two years. Despite this growing awareness, underinsured businesses leave their futures in jeopardy and their owners financially and legally liable for costs beyond the limits of their insurance.

The 2025 Hiscox Underinsurance in Small Business Report, last released in 2023, surveyed 2,000 small business owners in the U.S. and 4,250 business owners internationally between June 18 and June 30, 2025. Key findings include:

  • There is still a widespread misunderstanding of insurance coverage: The vast majority of small business owners cannot accurately describe the coverage included in a policy; 74% misunderstood what a General Liability (GL) policy covers, 83% fail to correctly describe Professional Liability (PL) coverage, and 77% do not understand what a Business Owner’s Policy (BOP) covers. However, since 2023, there has been an improvement in the understanding of GL coverage, with a 9% increase in the number of small business owners who can accurately describe it.
  • Policies are often misconstrued as a catch-all: Insurance misunderstandings frequently include business owners mistakenly believing a GL policy would pay a claim for a fire or flood on their owned property or a client filing a lawsuit alleging incorrect advice. For PL, common misconceptions include belief that it would cover someone slipping and falling on their property, or damage to their business equipment.
  • Cyber risk coverage is the new front line of insurance misunderstanding: Most small businesses in the U.S. have heightened exposure to cyber risk (75%). This includes simply having a website, using online payments, or utilizing email. However, of those who don’t have cyber coverage, 39% don’t believe they need cyber insurance because their systems are secure and 30% incorrectly believe they are too small to be attacked.
  • Things are looking up for small businesses in the U.S.: In the past two years, 62% have seen a revenue increase, which is up from 47% in 2023. Despite this, the concerns for small business owners in the U.S. differ significantly to their European counterparts with 63% citing either inflation and rising costs or an economic downturn as the top concern. The top concerns in the U.S. are inflation and rising costs (51%), followed by a downturn in the economy (44%), and theft or property damage (32%). In Europe, the top concerns are cyberattacks (39%), inflation or rising costs (37%), and theft or property damage (35%).

“Business owners are experts in their profession, but insurance terminology can seem tough to master. Business insurance is still chronically misunderstood, with most business owners expecting a policy to cover scenarios it isn’t designed for,” says Mary Boyd, CEO of Hiscox USA. “Small businesses are the heartbeat and soul of our communities, and in fact, shoulder our entire U.S. economy. They achieve the extraordinary every single day, and deserve to feel safe in the knowledge that their courage will be matched by their insurer and policy. The more knowledge they have about the risks they face and how specific policies match up, the safer their business. As an industry, we must continue to help business owners understand the differences between policies, omit alienating jargon, and encourage them to let us know when their business has changed.”

How to make sure a small business is fully insured:

For business owners, there are some key ways to stay fully protected:

  1. Before buying or renewing insurance, research the needs of the specific industry online or speak to an expert. There are some great resources online, including recommendations for what insurance is needed for different types of businesses.*
  2. Tell your local insurance broker or agent the good, the bad, and the ugly. Omitting or misrepresenting information on insurance applications may result in policy invalidation, claim denial, and potential legal consequences. More accurate information means more accurate protection.
  3. Review your insurance every two years or if your business size (i.e. revenue, customers, property, products, employees) has changed by more than 20%. Business insurance should grow and evolve with a business; if the business has recently expanded or has launched a new service, it may not be covered by the current policy.

*You can also speak to a licensed insurance agent online at www.hiscox.com or call 1-844-725-9633.

Methodology

Research for the Hiscox Underinsurance in Small Business Report was conducted by Wakefield Research between 18 June and 30 June 2025, using an email invitation and an online survey. The findings are based on responses from 6,250 small business owners, which for the purposes of this research we defined as businesses with 1-50 employees in the USA, UK, France, Germany, Spain and Portugal. The data comprises of 2,000 US respondents, 250 respondents in Portugal, and 1000 respondents from all other markets.

This data was then used to calculate whether or not these businesses were underinsured. This was calculated by testing each individual response against seven underinsurance criteria. These criteria are based on the specific insurance needs in each market and determine whether there is a high likelihood that the respondent is underinsured. Whilst exact coverage needs cannot be determined without an in-depth risk review, this approach provides an overall level of underinsurance that we can have high confidence in. Example criteria are:

  • Respondents who have customers visit them at their place of work (e.g. office or shop) should purchase general liability insurance.
  • Respondents in industries where professional advice is included in the service should purchase professional liability insurance.

Related Materials

You can read the full U.S. report HERE.

About The Hiscox Group

Hiscox is a global specialist insurer, headquartered in Bermuda and listed on the London Stock Exchange (LSE:HSX). Our ambition is to be a respected specialist insurer with a diverse portfolio by product and geography. We believe that building balance between catastrophe-exposed business and less volatile local specialty business gives us opportunities for profitable growth throughout the insurance cycle.

The Hiscox Group employs over 3,000 people in 13 countries and has customers worldwide. Through the retail businesses in the UK, Europe and the USA, we offer a range of specialist insurance products in commercial and personal lines. Internationally traded, bigger ticket business and reinsurance is underwritten through Hiscox London Market and Hiscox Re & ILS.

In the USA, Hiscox small business Insurance is underwritten either by Hiscox Insurance Company Inc., a Chicago-based insurance company, or a Hiscox Syndicate at Lloyd’s, London, which is available on a surplus lines basis through licensed surplus lines brokers. Hiscox USA currently provides a variety of admitted or specialty risk solutions, including a broad spectrum of errors & omissions, general liability, cyber and data security, media liability, management liability, crime, entertainment, and terrorism insurance products.

Our values define our business, with a focus on people, courage, ownership and integrity. We pride ourselves on being true to our word and our award-winning claims service is testament to that. For more information, visit www.hiscoxgroup.com.

This communication is for informational purposes only. The content of this communication is not intended, nor shall it be deemed business advice, legal advice, or a solicitation of insurance with regard to any particular or specific person or entity. For information on the full dataset or to inquire further about the methodologies and sources used, please contact [email protected].

Media Contacts

Lucy Baines
Hiscox USA
+1 844 646 3404
[email protected]