Knowledge gaps and timing misconceptions leave U.S. business owners vulnerable as 77% lack adequate coverage, Hiscox survey shows.
Three out of every five small business owners in the U.S. report increased revenues over the past two years, yet an alarming 77% of small businesses remain underinsured—up from 75% in 2023—according to the 2025 Hiscox Underinsurance in Small Business Report.
While small business revenue growth has accelerated significantly—jumping to 62% reporting reporting increases today, from 47% two years ago—insurance protection has not kept pace, according to the survey report.
The survey found that a substantial portion of U.S. business owners lack adequate coverage across critical policy types. Roughly 65% carry general liability coverage, 49% have property insurance, and 42% have professional liability insurance, suggesting that many growing businesses operate with significant coverage gaps.
Widespread Misunderstandings About Insurance
Major knowledge deficiencies plague the small business community across virtually every type of policy, Hiscox found:
- 83% of business owners cannot correctly describe what professional liability insurance covers, often mistakenly believing it protects against bodily injury claims or their own equipment damage.
- 75% of small business owners have heightened exposure to cyber risk, yet among those lacking coverage, 39% believe their systems are secure enough to forgo protection, and 30% dismiss the need entirely because they consider their business too small to target.
- 74% misunderstand general liability coverage, expecting it to address property damage from fire or flood—situations typically excluded from such policies.
“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,” said Mary Boyd, CEO of Hiscox USA. “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,” she said.
Misguided Timing Delays Critical Protection
A critical challenge emerges in when small business owners believe they should purchase insurance, according to the report. Nearly 45% think the appropriate time to secure coverage comes later than it actually does.
Twenty-four percent wait until they work full-time on their venture, while 21% delay purchases until profitability arrives or revenues exceed $100,000 annually. This postponement directly contributes to the coverage gaps plaguing the sector, with 22% lacking needed general liability coverage, 25% without required professional liability protection, and 35% missing cyber insurance entirely.
Obtain the report here. &
Based in New York, Stephen Freeman is a Senior Editor at Trending Insurance News. Previously he has worked for Forbes and The Huffington Post. Steven is a graduate of Risk Management at the University of New York.