The New Year always provides an excellent opportunity to look at what the landscape will look like forging ahead while strategizing for sustainability. The Small Business Administration’s definition of a small business is “an independent operation with fewer than 500 employees.” This accounts for 99.9% of the American economy, as there are more than 33 million small businesses here employing over 60 million workers. A staggering 90% of small business owners are not confident that their companies are carrying adequate coverage.

Insuring Tomorrow’s Triumphs: A Quick Look at Small Business Coverage

The top three most common business insurance claims in America are now burglary and theft, water-related damage, and wind and hail damage. A startling 2/3 of small business owners think that a recession will occur before the end of 2024 with the same magnitude as the crisis in 2008. With this threat looming overhead, many have mandated cost-cutting measures. Over 90% of small business owners find it challenging to offer an adequate amount of coverage for their employees, and nearly 90% of small business owners are worried about potential cyber-attacks.

Data’s Role in the Safety Net: Navigating Small Business Insurance Trends

Workers compensation claims in 2020 were most frequent among the medical and blue-collar fields, with truck drivers and nursing personnel at the top of the list. Commercial insurance incurred losses netted over $200 million in 2022, while workplace fires are the 4th most common business insurance claim in the nation. Ransomware attacks grew by nearly 93% in 2021, as computer-savvy criminals took advantage of the emerging work-from-home landscape.

By the Book: Which Types of Business Insurance Are Mandatory?

The types of small business insurance required by law vary by state, but most states require a bare minimum of workers compensation insurance and unemployment insurance for any business with employees. Workers’ compensation is the main policy type to focus on in Missouri, with other viable types being general liability insurance, product liability insurance, cyber liability insurance, and commercial property insurance. 

  • The driving factors that affect small business insurance costs are what type of business you have, how many employees you have, what your coverage needs are, and your history of prior claims.
  • Some of the elements not covered under small business insurance are radioactive fallout, government-mandated seizure, acts of fraud, business vehicles, earthquakes, and infectious diseases.

Worker’s Compensation Insurance: This type of coverage offers benefits for employees who get sick or injured while on the job and is mandatory in every US state. Workers compensation requirements were established in 1911, with this valuable form of insurance that can cover medical bills, lost wages, disability payments, and even funeral costs if workers perish during an accident on the job.

  • Registered nurses, general laborers, truck drivers, inventory stockers, and nursing assistants were the professions with the most illnesses requiring days off from work in 2020.
  • Transportation, environmental contamination, homicides, fires and explosions, and vehicle crashes were the top causes of workplace death in 2021.
  • An average cost for workers compensation is about $540 per year, or $44.00 a month.

Unemployment Insurance: This form of coverage offers financial benefits for eligible workers that are covered by an imposed payroll tax. 

  • In 2022, the United States Department of Labor paid a total of $24.3 billion in unemployment insurance benefits. 
  • As of September 2023, there were 219,000 seasonally adjusted initial unemployment claims.
  • Individual workers’ wages are recorded on DES files and retained for five quarters to be used for determining benefit amounts.
  • All said tax is deposited into the Missouri Unemployment Compensation Fund and can be used to pay unemployment benefits to claimants. 
  • Effective Jan 1, 2023, state law now allows DES to redirect monies to the Unemployment Automation Fund from Missouri employers who encounter liability for first-quarter unemployment insurance. 

Workplace Fires:

Commercial property insurance will also cover fire damage and is still one of the most common insurance claims for small businesses. Fire claims are the fourth most common business claim, and in the USA a life-threatening blaze happens every 60 seconds. In 2021 total costs from fire losses exceeded $44 million, with total costs exceeding $133.26 in loss per capita. 

Cyber Liability Insurance:

Cyber liability insurance can offer financial protection for small businesses that are victims of malware attacks. In 2022, over 80% of small business owners reported that they feel vulnerable to a cyberattack. 2021 saw a 75% rise in direct written premiums for the cyber insurance market, with the trend continuing into the first quarter of the following year. One of the reasons for the rise in cyber insurance premiums is an incredibly high loss ratio for insurers, due to the length of business interruption after one of these unfortunate events. 

Safeguarding a Resilient and Prosperous Future:

We have enjoyed putting in the many hours it has taken to create a place where protection meets peace of mind! Obtaining each different type of small business owner’s insurance poses different challenges and the opportunity for us to share our extensive knowledge with you. In no case ever is it a good idea to leave your business up to the hands of fate! These sudden events can be very expensive and can come with hardly any warning. As the cold months are here and there are many opportunities to sit down and plan your next move, we at Alexander Insurance Agency of St. Charles are standing by to guide you through the process of safeguarding and strategy.