25 Small Business Insurance Statistics on Coverage, Claims, and Survival
What small businesses actually insure, how many skip key coverage, which claims cost the most, how long new firms survive, and the injury and cyber risks they face, in 25 cited statistics for U.S. owners.
Most small business owners buy some insurance, but far fewer buy the full set of coverages that would keep the business alive after a fire, a lawsuit, a cyberattack, or a long shutdown. A business owners policy is the usual starting point, and the data show exactly where owners stop short of it. This report gathers 25 cited statistics on who small business owners are, how long new firms survive, which coverages they carry and skip, the claims they actually file, and the workplace and cyber risks they face. Every figure comes from a government agency, the Federal Reserve Banks, an industry research body, or an insurer’s own published claims data.
Key Takeaways
- Most firms carry liability, far fewer carry income protection - 91% of small employers carry liability insurance, but only 34% carry business interruption coverage.
- Cost is the biggest barrier - 70% of insured firms named cost as an insurance challenge in 2024.
- Water, theft, and falls drive claims - each made up 20% of claims in The Hartford’s 2025 analysis, while fire was the costliest at $80,000.
- Half of new businesses are gone within five years - only 51.4% of establishments that opened in the year to March 2020 were still operating in March 2025.
- Many owners work from home - 17% of small employers are headquartered in a residence.
- The smallest firms pay most liability costs themselves - businesses under $1 million in revenue self-insured $82.7 billion of their $112.0 billion in tort costs in 2021.
Who small business owners are
1. Nonemployer firms nearly doubled in 25 years
The fastest-growing slice of small business is the one-person operation. The number of nonemployer firms, businesses with no paid staff, grew from 15.4 million in 1997 to 29.8 million in 2022, according to the SBA Office of Advocacy. Freelancers, consultants, and side businesses often assume insurance is for larger firms, yet a single client injury, damaged laptop, or contract dispute can hit a solo owner just as hard as a company with staff.
2. 86.7% of nonemployer businesses are sole proprietorships
Legal structure shapes personal risk. Most nonemployer firms, 86.7%, are organized as sole proprietorships, while 55% of small employer firms are S corporations. A sole proprietor has no legal separation between business and personal assets, so a liability judgment against the business is a judgment against the owner. For these owners, a liability policy is often the only barrier protecting savings and a home.
3. Small firms provide 56.6% of rural jobs
Small business matters even more outside cities. There were 4.3 million small business establishments in rural areas in 2022, representing 96.5% of establishments outside metropolitan areas and 56.6% of rural employment, compared with 47.5% in metro areas. When an uninsured loss closes a rural employer, there are often few other local jobs to absorb the workers, which makes coverage a community issue as much as a private one.
4. 17% of small employer firms are headquartered in a home
Home-based businesses are not limited to solo freelancers. In the Federal Reserve’s 2024 survey of small employer firms, 17% were headquartered in a residence, the same share that owned their space, while 59% rented. This matters because a standard homeowners policy typically offers little or no coverage for business equipment, inventory, or business liability, leaving home-based owners exposed unless they add business coverage.
5. 59% of indebted firms backed their loans with a personal guarantee
For many owners, the line between business and personal finances is thin. Of small employer firms with debt, 59% used a personal guarantee to secure it, and 51% used business assets, according to the Federal Reserve’s 2025 survey. If an uninsured fire or lawsuit closes the business, a personally guaranteed loan still has to be repaid, which turns a business loss into a household one.
6. Small businesses lost 9.1 million jobs in early 2020
The pandemic showed how fast a shutdown can spread. Between the first and second quarters of 2020, the U.S. lost more than 15 million jobs, and 9.1 million of them were at small businesses. Small business employment recovered by the third quarter of 2022. Most business interruption policies require physical damage to pay, so the episode was a hard lesson in reading the trigger language before a crisis rather than after.
How long new businesses survive
7. About 78% of new establishments survive their first year
The first year is the riskiest. Of the 988,310 establishments that opened in the year ended March 2024, 77.9% were still operating a year later, according to the Bureau of Labor Statistics. That means roughly one in five new locations closed within twelve months. New businesses usually have thin cash reserves, so an uninsured loss in year one is far more likely to be fatal than the same loss in year ten.
8. Only 51.4% of businesses opened in 2019-20 reached five years
Survival keeps falling with each year. Of establishments that opened in the year ended March 2020, 51.4% were still operating in March 2025, five years later. This cohort’s first year ended just as the pandemic hit, yet its five-year survival stayed close to the historical pattern. Every closure has many causes, but an uninsured property loss or lawsuit is one that coverage can take off the table.
Data
| Mar 2020 | 100.0% |
|---|---|
| Mar 2021 | 80.9% |
| Mar 2022 | 72.3% |
| Mar 2023 | 63.6% |
| Mar 2024 | 57.2% |
| Mar 2025 | 51.4% |
9. About a third of businesses reach their tenth year
Long-term survival is the exception. Of the 677,876 establishments that opened in the year ended March 2015, 34.7% were still operating in March 2025. Looking further back, just 12.6% of the establishments that opened in the year ended March 1994 were still in business 31 years later. Firms that last accumulate more equipment, payroll, and contracts, so the cost of an uninsured claim tends to grow with the business.
What coverage small businesses carry
10. 91% carry liability insurance and 80% carry workers’ comp
Liability is the most widely held small business coverage. Among small employer firms in the Federal Reserve’s 2024 survey, 91% carried liability insurance, including general, professional, and product liability, and 80% carried workers’ compensation. Both are frequently required, liability by landlords and clients and workers’ comp by most states once a business has employees, which helps explain why they lead the list.
11. Only 69% carry property coverage
Property insurance protects the building, equipment, and inventory, yet only 69% of small employers reported carrying it, and 50% carried commercial auto coverage. Some of the gap reflects firms that rent space and own little equipment, but tenants are usually still responsible for their own contents and improvements. A fire or burst pipe can destroy stock and gear that the landlord’s policy will not replace.
12. Just 34% carry business interruption coverage
Income protection is where the biggest gap sits. Only 34% of small employers reported carrying business interruption insurance in 2024. That coverage pays ongoing expenses such as rent, loan payments, and payroll while a business is closed after a covered loss. Without it, a firm can survive the fire itself and still fail during the months it takes to reopen.
- Carry business interruption 34%
- Do not report it 66%
13. Fewer than a third carry cyber coverage, and 10% carry flood
Two fast-growing risks are among the least insured. Only 32% of small employers carried cyber or data breach coverage in 2024, and just 10% carried flood coverage where their property policy excluded it. Standard property policies generally exclude flood, and general liability policies are not built for data breaches, so firms without these add-ons are absorbing those losses directly.
14. 3% of small employer firms carry no insurance at all
A small but real share of employers operate completely uninsured. In the Federal Reserve’s 2024 survey, 3% of small employers reported carrying none of the listed coverage types. For a business with employees, customers, and a physical location, that leaves every injury, lawsuit, and property loss on the owner’s balance sheet.
15. 78% of insured firms report an insurance challenge
Buying coverage is often frustrating. 78% of firms reported at least one insurance-related challenge, and cost, including high premiums and deductibles, was the most common at 70%. Only 22% said they had no insurance-related challenges. Price pressure can push owners to drop optional coverages such as business interruption and cyber.
16. 29% say policies are too complicated
Confusion is the second-biggest complaint. Among insured small employer firms, 29% said policies were too complicated or confusing, 16% cited coverage limitations including denied claims, 14% said insurers were not offering or had stopped offering coverage, and 11% said brokers did not understand their business. Reviewing exclusions before a loss is the simplest way to avoid a surprise denial.
The claims small businesses actually file
17. Water, theft, and slip-and-fall claims each make up 20% of claims
The most common small business claims are everyday events, not catastrophes. In The Hartford’s analysis of more than 1 million small business property and liability policies, water and freezing damage, burglary and theft, and slip, fall, and customer injury each accounted for 20% of claims in 2025, followed by wind and hail at 15%. Water and freezing damage claims averaged $34,600, the fourth most costly claim type.
18. Fire is the costliest claim at $80,000
Less frequent claims can be the most expensive. The average fire claim reached $80,000 in 2025, up from $35,000 in 2015, making it the costliest small business claim. Vehicle accidents averaged $50,000 and slip, fall, and customer-injury claims averaged $45,000. Fire claims often combine property damage with lost income, which is where business interruption coverage earns its cost.
The cost of risk
19. Package policies for business wrote $67 billion in premiums
Commercial multiple peril, the regulatory line where package policies such as business owners policies are reported, is a major market. Its property side wrote $45.5 billion in direct premiums in 2024, up 8.9%, and its liability side wrote $21.6 billion, up 5.0%, according to the NAIC. Together, that is roughly $67 billion a year flowing through the policy type built for small and mid-size firms.
20. Commercial insurers paid $233.8 billion in incurred losses in 2024
Claims flowing to businesses keep growing. Incurred losses for commercial insurance reached $233.8 billion in 2024, up from $171.3 billion in 2020, an increase of about 36.5% in four years, according to Triple-I (its table lists these figures in thousands of dollars). Those losses are funded by premiums, so rising claims put steady upward pressure on business insurance prices. They also show how much businesses rely on insurers to absorb losses they could not cover alone.
21. The smallest firms self-insure nearly three-quarters of their tort costs
Many small firms pay liability costs out of pocket. Businesses with under $1 million in revenue faced $112.0 billion in tort costs in 2021, and $82.7 billion of that was self-insured rather than covered by insurance, according to the U.S. Chamber Institute for Legal Reform. The study notes many small businesses find insurance too costly or underestimate their risk and end up underinsured or uninsured. A general liability policy moves that exposure off the owner’s books.
Workplace injuries and cyber risk
22. Private employers reported 2.5 million workplace injuries in 2024
Employee injuries remain common even as rates fall. Private industry employers reported 2.5 million nonfatal injuries and illnesses in 2024, down 3.1% from 2023. The total recordable case rate fell to 2.3 per 100 full-time workers, the lowest in a data series going back to 2003. Workers’ compensation covers these claims, and most states require it once a business has employees.
23. Mid-size establishments have the highest injury rates
Injury risk is not highest at the smallest businesses. In 2023, establishments with 50 to 249 employees had a rate of 3.1 cases per 100 full-time workers, compared with 2.1 for establishments with 11 to 49 employees and 1.0 for those with 1 to 10. For a growing firm, crossing into that size band is a natural point to revisit safety training and workers’ compensation limits.
24. A worker died on the job every 104 minutes in 2024
Fatal injuries are rarer but far more costly. There were 5,070 fatal work injuries in the U.S. in 2024, a rate of 3.3 per 100,000 full-time workers, which works out to one death every 104 minutes. Falls, slips, and trips caused 844 of those deaths. For small employers in construction, transportation, and other high-hazard trades, a single fatality can bring a workers’ comp claim, an OSHA investigation, and a lawsuit at once.
25. Cybercrime losses reported to the FBI topped $20 billion in 2025
Cyber risk now reaches businesses of every size. Losses reported to the FBI’s Internet Crime Complaint Center reached $20.877 billion in 2025, a 26% increase from 2024, across more than 1 million complaints. Business email compromise alone accounted for about $3.05 billion in losses from 24,768 complaints. With only 32% of small employers carrying cyber coverage, most small firms hit by these schemes would absorb the loss themselves.
How to close the coverage gaps in your small business
The data show most owners buy liability first and stop there. A few steps close the most common gaps:
- Start with a package policy. A business owners policy bundles property, liability, and business interruption coverage, the income protection only 34% of small employers carry.
- Confirm your liability limits. Slip-and-fall claims now average $45,000, so make sure your general liability coverage fits your foot traffic and contracts.
- Add cyber coverage if you take payments or store data. Business email compromise cost reporting victims about $3.05 billion in 2025, and a cyber liability policy is built for those losses.
- Compare carriers, not just prices. With 29% of owners finding policies confusing, use our carrier comparison and compare quotes side by side.
- Check how we source data. Our methodology page explains how every figure here was verified.
Frequently Asked Questions
What insurance do most small businesses carry?
Liability insurance is the most common, carried by 91% of small employers in 2024, followed by workers’ compensation at 80% and property at 69%. Business interruption (34%), cyber (32%), and flood (10%) are far less common, which is where most coverage gaps sit.
What are the most common small business insurance claims?
Water and freezing damage, burglary and theft, and slip, fall, and customer-injury claims each made up 20% of claims in The Hartford’s 2025 analysis. Fire claims are less common but the most expensive, averaging $80,000.
Do home-based businesses need business insurance?
Often, yes. 17% of small employers are headquartered in a residence, and a homeowners policy typically offers little or no coverage for business equipment or business liability. Most nonemployer firms are also sole proprietorships, so a business lawsuit can reach the owner’s personal assets.
How many new small businesses fail?
About one in five new establishments closes within a year: 77.9% of those opened in the year to March 2024 survived to March 2025. Only 51.4% of establishments opened in the year to March 2020 reached five years, and 34.7% of those opened in 2014-15 reached ten.
Why is small business insurance so expensive?
Claims costs keep climbing. Commercial insurers’ incurred losses rose to $233.8 billion in 2024 from $171.3 billion in 2020, and the average fire claim more than doubled to $80,000 over a decade. That pressure is why 70% of insured firms cite cost as their top insurance challenge.