Few SME owners fully read policies, understand insurance costs

Although they show a high level of awareness for risks and challenges facing their organizations, just 22% of small- and medium-enterprise (SME) owners fully read through their insurance policies and 56% admit to not knowing the exact cost of their commercial coverage, according to Embroker.

Further, 1 in 5 admitted to not knowing how their insurance purchases are handled, while nearly 30% of SMEs allow their insurance to auto-renew without making changes.

Embroker’s research also showed more than half of these business owners lean on brokers to enroll in coverage and a quarter rely on insurance professionals to fully research and price out their options.

“While many SME owners and startup founders have been experiencing strong growth and financial backing in the past year, modern-day risks including cyberattacks, supply chain breakdowns and remote workforce issues can stop progress in its tracks. This means companies need to constantly evaluate risk and protect their business,” Matt Miller, Embroker CEO, said in a release. “Business insurance is a critical element in a company’s growth strategy, allowing a company to effectively transfer risk and ensure that unforeseen events don’t impede their growth. It is not a decision and process you can go through on autopilot.”

Knowledge gap welcomes vulnerability

This general lack of understanding about their commercial coverages is leaving SMEs vulnerable to quickly emerging risks, particularly around cyberattacks, Embroker reported.

Although around half of SMEs are fearful their coverage is inadequate to respond to a ransomware attack, concern for the risk is still relatively low. More than 60% of owners said they are unlikely to face a data breach or ransomware attack.

Unsurprisingly, SMEs in the tech world are more aware of cyber risks and more willing to accept the fact that they are likely to get hit by a cyberattack. Nevertheless, only 34% said they carry a cyber policy, while 9% are uncertain if their policy would cover a cyber incident.

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