Nearly Three in Four Small Businesses Are Underinsured
A 2026 survey by ERGO NEXT, the small-business-insurance brand formerly known as Next Insurance and now part of Munich Re’s ERGO group, found 73% of small businesses are underinsured, meaning their coverage does not protect against the most significant risks the business actually faces. The survey covered 501 U.S. small business owners, founders, and sole proprietors, fielded April 29 through May 12, 2026.
A quarter of that same population, 25%, carries no insurance at all, and 14% are unsure what their existing policy even covers. Combined, those three figures describe a market where being fully, knowingly, and adequately covered is closer to the exception than the norm.
The Counterintuitive Tenure Pattern
Adoption did not track cleanly with how long a business has been operating. 82% of businesses under one year old carry insurance, versus 67% of businesses one to five years old, meaning the newest businesses in the survey were actually more likely to carry coverage than slightly more established ones.
That pattern is worth taking at face value rather than smoothing over. A plausible read is that newer businesses are still operating in a startup mindset where insurance gets bundled into initial setup costs, while a business a few years in has settled into routines that do not automatically revisit a coverage decision made early on.
Why Small Business Owners Say They Are Skipping Coverage
Asked directly, 84% of respondents said they prioritized other expenses over insurance in the past six months, the single largest reason cited. 46% pointed specifically to cost, and 32% said insurance was too confusing for them to identify their own coverage gaps.
The confusion figure is distinct from the cost figure in an important way: nearly a third of underinsured business owners are not necessarily choosing to go without coverage on price alone, they are struggling to even understand what gap they are carrying in the first place.
The Scale of the Gap Against the Broader Market
Commercial P&C net premiums written reached $918.6 billion in 2024, a market of substantial scale. A 73% underinsurance rate among small businesses sitting inside a market that large describes an enormous amount of real, uncovered risk exposure still sitting on small business owners themselves, not transferred to any carrier at all.
That gap is not evenly distributed demand waiting to be captured by whichever agency reaches a prospect first, it is a population that, per the figures above, frequently does not fully understand what it is missing until something goes wrong.
What “Confusing” Means for a Producer’s Opening Pitch
This is reasoning, not a separately cited statistic: a prospect who says insurance feels too confusing to evaluate is not the same conversation as a prospect who has already priced coverage and is simply choosing not to buy it. The 32% figure above suggests a real, sizable share of the underinsured population needs education before they can even meaningfully compare options, not just a competitive quote.
An opening conversation built around clarifying what a business actually has and does not have, rather than leading with price, is speaking directly to the reason nearly a third of this survey’s underinsured respondents gave for their own coverage gap.
Turning a Confusing Category Into a Booked Conversation
A prospect who does not fully understand their own coverage gap is unlikely to seek out that conversation on their own initiative. Reaching them requires actual outreach, not a passive assumption that confusion will eventually resolve itself into a purchase.
Human + AI SDRs book qualified meetings with the small businesses most likely to actually need that conversation, turning a category defined by confusion and skipped coverage into real calendar time for a producer.
The Numbers
A 2026 ERGO NEXT survey of 501 U.S. small business owners, founders, and sole proprietors found 73% of small businesses are underinsured.
Insurance Journal, Majority of Small Business Are Underinsured as Other Expenses Prioritized
25% of surveyed businesses carry no insurance at all, and 14% are unsure what their existing policy covers.
Insurance Journal, Majority of Small Business Are Underinsured as Other Expenses Prioritized
82% of businesses under one year old carry insurance, versus 67% of businesses one to five years old.
Insurance Journal, Majority of Small Business Are Underinsured as Other Expenses Prioritized
84% of respondents prioritized other expenses over insurance in the past six months; 46% cited cost; 32% said insurance was too confusing to identify their own coverage gaps.
Insurance Journal, Majority of Small Business Are Underinsured as Other Expenses Prioritized
Commercial P&C net premiums written reached $918.6 billion in 2024, up 7.1% year over year, the market scale this underinsurance gap sits inside.
Sources
The external data in this article draws on the sources below. Figures described in the text as estimates or industry triangulations are directional and are not attributed to a single dataset.
- Insurance Journal, Majority of Small Business Are Underinsured as Other Expenses Prioritized
- Insurance Information Institute (III.org), Facts + Statistics: Industry Overview