Small Businesses Opting for Digital Insurance Solutions
Speed and convenience are key drivers in the changing landscape of small business operations, and insurance is no exception. A recent survey indicates that small business owners are increasingly embracing digital platforms to research, compare, and purchase insurance coverage without the need for an agent.
NEXT conducted a survey in January 2025, polling 1,500 small business owners across the country to gain a better understanding of these shifts. The findings reveal a significant trend toward digitalization in the way small businesses approach insurance.
The Rise of Online Insurance Purchases
The days of in-person or phone-based interactions with insurance agents are dwindling in popularity among busy business owners. Digital methods, such as 100% online purchasing or adding insurance through online payroll and financial services, are gaining prominence.
Specifically, 61% of small business owners now report buying business insurance online, either directly from an insurance provider or through a financial service. This represents a significant jump when compared with the 40% who still deal with traditional brokers or agents.
Supporting these findings, a previous PwC global survey found 48% of small businesses preferred buying insurance online, with half of those purchasing directly from the insurance company and 28% using comparison sites or apps. Only 10% reported using a broker or agent website.
Online Research Becomes the Norm
Small business owners are taking a more active role in researching their insurance needs. The survey found that 24% of participants conduct online research of their business insurance. Only 17% rely on insurance agents to obtain background information on the types of insurance they need.
To stay ahead, insurance providers must upgrade their digital offerings, supply useful guides, and expand the available educational resources to equip business owners with information to make informed decisions.
Other resources also play a role, including friends, families, mentors, and colleagues (13%), as well as professional groups, associations, business schools, and learning programs (each a source of valuable information for 8% of participants).
Motivations Behind Purchasing Insurance
The motivations for securing small business insurance can be categorized into three key areas:
- Legal compliance (22%): Some business owners purchase the minimum amount of insurance necessary to meet legal requirements.
- Maximum protection (21%): These owners opt for the most comprehensive insurance protection they can afford, often investing in a broader portfolio of policies.
- Selective risk coverage (21%): An equal proportion of small business insurance buyers prioritize policies that protect them from specific, targeted risks.
The results highlight the need for insurers to provide versatile, customized insurance solutions that fit the varying priorities, budgets, and risk appetites of small business owners. A one-size-fits-all approach has become less effective.
Addressing the Knowledge Gap
Research by NEXT has uncovered a consistent problem; many small business owners lack sufficient knowledge about their insurance needs, leading to coverage gaps.
Past findings show that 90% of small business owners lack confidence in the adequacy of their insurance coverage. Furthermore, 96% failed to demonstrate a basic understanding of general liability insurance, a common policy for business owners.
Additional research among restaurant owners in 2025 revealed that 38% of them had no insurance that year, an increase from 29% the previous year. The most recent data also shows 36% of respondents believe small business insurance is unnecessary. This highlights a lack of awareness of specific risks and the significance of coverage benefits.
This knowledge gap leaves businesses susceptible to unexpected risks and liabilities.
5 Tips for Small Business Owners
Based on the data, small business owners need to take action to get the right coverage to achieve their goals.
Here are five recommendations:
- Utilize digital tools: Use online resources to compare business insurance policies and get quotes customized to your needs.
- Request tailor-made policies: Don’t settle for basic coverage. Customize your policies and request flexible options that align with your specific risks.
- Avoid paying for unnecessary coverage: Only purchase the insurance you need to minimize your costs.
- Ensure transparency: From insurance providers, ask for clear and straightforward explanations about policy terms, pricing, and claims procedures to avoid surprises.
- Understand risk exposure: Consider coverage that extends beyond the legal minimum. Assess the risk of your business operations, location, and business type.
Prioritize Education
Look for insurers that offer educational tools and guidance to provide more clarity on insurance decisions. By staying informed and adapting to a changing landscape, small business owners can develop comprehensive insurance plans that meet their needs.
