Small Business Insurance Statistics 2024 (2024)

The Small Business Administration generally defines a small business as an independent business with fewer than 500 employees.[1] Most businesses in America are small businesses, accounting for around 99.9% of all American businesses and making them a vital part of the American economy.[1]

There are more than 33.1 million small businesses in the United States, employing 61.7 million Americans. That’s 46.4% of private sector employees.[1]

When it comes to small business insurance, most small business owners (90%) aren’t confident their companies are adequately insured. Nearly all (96%) of small business owners revealed they don’t know the basics about small business insurance after taking an insurance knowledge test this year (2023), according to a Next Insurance survey.[2]

The same survey showed that 29% of small businesses don’t carry any small business insurance, while over half (53%) of small business owners said their biggest barrier to getting company insurance is being unaware of what kind of insurance their company requires.[2]

Small Business Insurance in the U.S. at a Glance

• Burglary and theft, water-related damage, and wind and hail damage are the top three most common business insurance claims in America.[3]
• Two-thirds of small business owners expect a recession to occur before the end of 2024 that is similar to or worse than the Great Recession of 2007-09. As a result, the majority (88%) of small business owners have either reconsidered or plan to reconsider their insurance policies or plan to cut costs.[4]
• Nearly all (94%) of small business owners find it challenging to offer employer-sponsored health insurance to their employees.[2]
• The SBA reported that 88% of small business owners feel vulnerable to a cyberattack.[1]
• The average monthly cost of general liability insurance, commercial property, inland marine, cyber liability, business interruption, and workers’ compensation insurance for a small business is $340.75 a month, according to The Hartford, Hiscox, and Insureon.[7]

Small Business Insurance Statistics

• The most common job types for workers’ compensation claims in 2020 were in the medical and blue-collar fields, including registered nurses and truck drivers.[5]
• Montana has the longest weekly unemployment benefit for residents (28 weeks) and Florida, Kentucky, and North Carolina have the shortest (12 weeks).[8]
• Incurred losses for commercial insurance exceeded $200 million in 2022, and the first-year losses reached that level.[5]
• Workplace fires are the fourth most common business insurance claim in America.[3]
• The average personal injury sum awarded by juries in product liability claims was over $7 million in 2020.[5]
• Ransomware attacks grew by nearly 93% in 2021. Significant losses in claims have caused cyber liability insurance premiums to rise in recent years.[6]
• Nearly half (42%) of small business employers who said they don’t offer health insurance to their employees said they don’t plan to in the future.[2]

Types of Small Business Insurance Required by Law

The types of small business insurance required by law vary by state, but most states require worker’s compensation insurance and unemployment insurance for any businesses that have employees.[9]

Other types of small business insurance that could be required in your state include disability insurance, professional liability insurance, commercial auto insurance, and liquor liability insurance.[9] For example, doctors who practice in Colorado, Connecticut, Kansas, Massachusetts, New Jersey, Rhode Island, or Wisconsin must have professional liability insurance.[9]

Other types of small business insurance to consider are general liability insurance, commercial property insurance, product liability insurance, cyber liability insurance, business interruption insurance, and a business owner policy (BOP).[9]

• The main factors that influence small business insurance costs are business type, the number of employees, coverage needs, and prior claims history.[9]
• Earthquakes, floods, infectious diseases, war, radioactive fallouts, government seizures, intentional and fraudulent acts, and business vehicles (unless covered with a commercial policy) are not covered under small business insurance.[9]

Workers’ Compensation Insurance

Workers' compensation insurance, which offers benefits for employees who get hurt or sick due to their jobs, is mandatory in all US states except Texas and Wyoming. Workers’ compensation programs were established beginning in 1911.[10] This type of insurance can cover medical bills, lost wages and disability payments, and funeral costs if workers die from a workplace accident.[10]

Workers’ Compensation Facts and Statistics

• The five jobs with the most injuries and illnesses involving days off from work from private industries in 2020 were nursing assistants, registered nurses, laborers, truck drivers, stockers, and order fillers.[5]
• The top six workplace deaths in 2021 were caused by transportation (including vehicle crashes), falls, exposure to harmful substances or environments, intentional injury by person (including homicides), contact with objects and equipment, and fires and explosions. These six types of workplace fatalities accounted for 5,190 deaths in 2021.[5]
• Transportation-related deaths accounted for 38% of total workplace fatalities, with 1,982 deaths (including vehicle crashes) in 2021.[5]
• Workers’ compensation insurance costs $45 a month on average, or $542 a year.[11]
• In 2023, employers pay on average .93 cents per $100 of payroll, down from .97 cents in 2022.[12]

Unemployment Insurance

Unemployment insurance offers financial benefits to eligible workers. Each state has an unemployment insurance program but also follows federal guidelines. Businesses pay for unemployment insurance through payroll taxes.[9]

Unemployment Insurance Facts and Statistics

• According to the United States Department of Labor, total benefits paid in the calendar year of 2022 equaled $24.3 billion.[13]
• As of September 2023, there were 219,000 seasonally adjusted initial unemployment claims in 2023.[12]
• Montana has the longest stretch of unemployment benefits available to residents, with a maximum of 28 weeks.[8]
• Florida, North Carolina, and Kentucky have the shortest number of weeks of unemployment benefits available to residents (12 weeks max).[8]
• According to July 2023 data from the Department of Labor, Washington has the highest average weekly benefit of all 50 states and Washington, D.C. at $718.46.[13]
• Mississippi has the lowest average weekly benefit of all 50 states and D.C., at $218.93.[13]

Commercial Insurance

Commercial property insurance assumes the risk of things that can go wrong for a company by helping repair or replace business property damaged and covered under your policy.

Commercial Insurance Facts and Statistics

• In 2022, the total incurred losses covered under commercial insurance were $202.7 million. Before 2022, incurred losses for commercial insurance hadn’t reached over $200 million since 2018.[5]
• In comparison to incurred losses, there were $394.8 billion in net premiums written for commercial lines insurance in 2022.[5]
• On average, commercial property insurance costs $63 a month, or $756 a year.[7]

Workplace Fires

Commercial property insurance also covers fire damages and is a common insurance claim for small businesses.[14]

• Fire claims are the fourth most common business claim.[3]
• A structure fire happens every 64 seconds, according to the Insurance Information Institute.[3]
• Total costs from fire losses in 2021 totaled $44.2 million or $133.26 lost per capita.[5]
• All three of the costliest large-loss fires in 2020 were in California, and eight of the 10 costliest large-loss fires in US history were in California, totaling $32,250,000 in estimated losses at the time the fires occurred.[5]
• Nine of the 10 deadliest fires in U.S. history occurred in the 1800s and 1900s, except for the World Trade Center terrorist attack, which caused 2,976 deaths.[5]

Product Liability Insurance

Product liability insurance helps cover your business in case of a claim about a product your company sells that was manufactured and distributed and caused harm to someone, or to their belongings.[15] Product liability insurance covers damages to someone’s property, bodily injuries, illness and wrongful deaths in case of a design defect, manufacturing defect, marketing defect, improper warnings or strict liability (meaning someone is harmed by your product, even if the company isn’t found negligent). Product liability insurance doesn’t cover product recall costs, employee injuries or accidents involving customers, such as slips and falls.[15]

Product Liability Insurance Facts and Statistics:

• The average price for product liability insurance is $1,146 a year. Premiums range from $736 to $2,431 a year, depending on if your business is a manufacturer or wholesale business.[15]
• The top factors to determine the premium of your policy are your business location, claims history and policy limits.[15]
• The average personal injury sum awarded by juries in 2020 was over $7 million.[5]

Cyber Liability Insurance

Cyber liability insurance can financially protect small businesses that suffer data breaches or malware attacks. In 2021, the cost of cyber crimes against small businesses reached $2.4 billion, according to the FBI.[1] Cyber insurance can be especially helpful for small businesses, as they can often lack the infrastructure that large companies have to afford these losses. In 2022, the SBA reported that 88% of small business owners feel vulnerable to a cyberattack.[1]

Cyber Liability Insurance Facts and Statistics

• Direct written premiums in the cyber insurance market grew by 74% in 2021 and insurance companies have seen continued increases through at least the first quarter of 2022.[6]
• Cyber insurance premiums have been rising. Reasons include high loss ratios for insurers due to large claims and business interruption claims due to cyber attacks.[6]
• The Cyber insurance market is growing and it’s on track to triple in size every three years at the current pace.[6]
• Ransomware attacks grew by nearly 93% in 2021.[6]
• To date, the highest ransom claim paid by an insurer for the ransomware attack of a customer was nearly $40 million.[6]

Health Insurance

Offering health insurance is a priority for many small business owners, and almost all—94%—find it challenging to include employer-sponsored health insurance as a part of their employment packages.[2]

Health Insurance Facts and Statistics

• Just over half of small business employers said they offer health insurance to their employees (56%), while the remaining 44% said they do not.[2]
• Nearly two-thirds (63%) of small business owners believe offering health insurance to recruit and retain their employees is at least moderately important, but 94% of small business owners admit to having health insurance themselves.[2]
• More than 60% of small employers said the main reason they don’t offer health insurance is because of the cost.[2]
• About four in 10 small business employers who said they don’t offer health insurance to their employees said they don’t plan to in the future, and 47% said they were unsure if they would offer health insurance in the future.[2]
• In addition, 98% of small business owners are concerned the cost of health insurance will become unsustainable in the next five to 10 years.[2]

Sources:

1. Small Business Administration
2. Next Insurance
3. Frankenmuth Insurance
4. Nationwide Agency Forward
5. Insurance Information Institute
6. National Association of Insurance Commissioners
7. Forbes Advisor: How Much Does Business Insurance Cost?
8. Center on Budget and Policy Priorities
9. Forbes Advisor: Small Business Insurance Needs: What’s Required?
10. Forbes Advisor: How Workers Compensation Insurance Works
11. Forbes Advisor: Workers Compensation Insurance: Cost Breakdown and Key Factors
12. The Hartford
13. United States Department of Labor
14. Insureon
15. Forbes Advisor: How To Get Product Liability Insurance