Online Business Insurance: The New Normal
Speed and convenience are reshaping how small business owners manage their operations, and insurance is no exception. A significant trend is emerging: small business owners are increasingly turning to digital platforms to research, compare, and purchase insurance coverage, often bypassing traditional agents.
NEXT conducted a nationwide survey of 1,500 small business owners in January 2025 to gain deeper insight into this shift. The survey results highlight a definitive move towards online insurance.
The Rise of Online Insurance Purchases
The days of in-person or phone-based insurance consultations are fading as busy entrepreneurs seek efficiency. The data shows a clear preference for digital methods, including buying directly online or through integrated financial services.
The survey found that a majority – 61% – of small business owners now purchase their insurance online, either through insurance companies’ direct websites or financial service providers. This figure surpasses the 40% who still rely on brokers or agents. This trend echoes findings from an earlier PwC global survey that indicated 48% of small businesses prefer online insurance purchases, with comparison sites and apps used by 28%, while only 10% would use a broker or agent website to buy it.
Researching Insurance Needs Online
Small business owners are becoming more self-reliant when researching their insurance needs.
NEXT’s survey revealed that 24% of participants researched online before buying coverage for their business, while only 17% relied on insurance agents for background information. This shift indicates a need for insurers to develop and improve their digital educational resources to help potential customers make informed insurance decisions.
Other sources of information for business owners include friends, families, mentors and colleagues (13%), as well as professional groups, trade associations, business schools and learning programs (each 8%).
What Motivates Business Owners to Buy Insurance?
The reasons behind small businesses’ insurance purchases are varied but can be grouped into three distinct categories, according to the NEXT survey:
- Legal Compliance (22%): Some business owners purchase the minimum coverage required by law.
- Maximum Protection (21%): These owners seek the most extensive coverage possible to protect themselves against a wide range of risks.
- Selective Risk Coverage (21%): These buyers prioritize policies that specifically address targeted risks to their operations.
These results emphasize the need for insurers to provide flexible and customized solutions that align with the different priorities, budgets, and risk tolerances of small business owners. A one-size-fits-all insurance model is ineffective.
Notably, a significant 36% of respondents do not feel they need small business insurance, which aligns with previous NEXT survey results.
The Knowledge and Coverage Gaps
Research suggests that small business owners often lack sufficient understanding of their insurance needs, leading to inadequate coverage.
Prior surveys have revealed that 90% of small business owners lack confidence in their insurance adequacy. Furthermore, 96% failed to demonstrate a basic understanding of general liability insurance, a common policy for business owners.
Another survey of restaurant owners, conducted in early 2025, revealed that 38% lacked necessary insurance coverage, a rise from 29% the year before. The recent data underscores insufficient awareness of risks and benefits.
The knowledge gap leaves small businesses vulnerable to various unforeseen risks and liabilities.
Tips for Making the Most of Small Business Insurance
To secure the right coverage, small business owners should consider these five tips:
- Rely on digital tools. Use online resources to compare policies and secure personalized quotes.
- Ask for a customized policy. Request coverage options suited to your specific risks instead of generic policies.
- Don’t pay for coverage you don’t need. Review the policy terms to ensure you are only insured against relevant and realistic risks.
- Seek transparency. Insist on clear explanations from insurers regarding policy terms, pricing and claims processes.
- Understand your risk exposure. Evaluate business risks and prioritize coverage that extends beyond legal requirements. Conduct a risk assessment to establish the right coverage level for your needs.
- Prioritize education. Look for insurers that offer educational tools and guidance. Choose those that simplify the insurance purchasing process.
