Rising Insurance Adoption Doesn’t Equate to Confidence
A recent nationwide survey of 500 small business owners conducted by NEXT has revealed a paradox in the small business insurance landscape. While insurance adoption is on the rise across various types of coverage, many business owners still feel unprepared to face real-world risks. The survey, a follow-up to NEXT’s 2023 industry pulse check, highlights the persistent gaps in understanding coverage and selecting appropriate policies for unique business needs.
Increased Insurance Coverage Across the Board
The survey found that a significant 92% of small businesses now invest in some form of business insurance, representing a 20% increase from NEXT’s previous survey in 2023. General liability insurance remains one of the most common types, with 62% of businesses having it in 2025, up from 51% in 2023. Other notable increases include:
- Workers’ compensation insurance: from 29% to 49%
- Professional liability insurance: from 20% to 31%
- Commercial property insurance: showing a significant increase of 58%
- Cyber liability insurance: nearly tripling from 10% in 2023 to 27% in 2025
Confidence Gap Persists
Despite the increase in insurance coverage, only 13% of small business owners feel completely prepared to face potential threats such as professional mistakes or workplace injuries. A significant 87% feel less than fully prepared, with less than half (47%) stating they are “very” or “completely” prepared. This represents a modest improvement from 34% in 2023 but still indicates a substantial confidence gap.
Top Business Risks and Motivations for Insurance
Professional mistakes remain the top concern for nearly half of the respondents, followed by employee illness or injury (36%), and cyber attacks (35%). The primary motivation for purchasing insurance is protection against financial loss (32%), followed by gaining peace of mind (21%), and protecting employees or customers (18%). Interestingly, only 14% of respondents indicated they purchase insurance tailored to their specific business risks, suggesting a perception that business insurance is often seen as one-size-fits-all.
Barriers to Insurance Adoption
Among the 8% of businesses that remain uninsured, cost and confusion are the primary barriers. The top reasons include:
- 53% citing insurance as too expensive
- 35% not believing insurance is necessary
- 30% being unsure about the type of coverage needed
- 18% lacking time to research and purchase coverage
Understanding and Trust in Insurance Providers
The survey also revealed that nearly 70% of small business owners struggle to understand coverage options, provider choices, and determining appropriate limits. Despite this confusion, 87% of respondents trust their insurance company to support them in times of need.
Conclusion
The findings suggest that while there’s been progress in insurance adoption among small businesses, significant challenges remain in terms of understanding and confidence. Insurance providers have an opportunity to better support small businesses by addressing these knowledge gaps and tailoring their offerings to meet specific business needs.
