Research conducted by the NAIC in March revealed that many small businesses — defined as those with fewer than 100 employees — are exposed to serious risks that could be mitigated by a better understanding of insurance options, according to Catherine J. Weatherford, NAIC Executive Vice President and CEO. Key findings of the research show:

Only 47% of small businesses offer heath insurance to their employees. Of those, 24% report changing the fee structure, deductibles or other components in the past year to offset the rising cost of premiums.
Only 59% of small businesses with fewer than 20 employees have workers' compensation insurance, which state law requires for most companies. Workers' compensation insurance protects business owners from claims by employees who experience a work-related injury or illness.
Only 35% of small businesses have business interruption insurance, which covers expenses like payroll and utility bills that often continue after a major event (e.g., a fire or storm) shuts down a company. Because rebounding from a disaster can take a considerable amount of time, small businesses need to understand this risk and the available insurance options.
Only 48% of small businesses carry commercial auto insurance. The others apparently rely on personal auto insurance. However, personal auto insurance policies typically have lower liability limits and may even exclude business-related liability.
While 71% of small businesses say they are very dependent on one or two key people for their success and viability, only 22% have Key Person life insurance, a type of policy that enables a business to weather the death of a key employee or buy out the key person's heirs if ownership rights are involved.
Among home-based businesses — 22% of the NAIC survey — 48% depend on their homeowners insurance to protect their businesses. However, most homeowners insurance policies severely limit coverage of business property and may totally exclude business-related liability claims.

"Insure U for Small Business represents a major commitment by the NAIC and its members — the chief insurance regulatory officials of the 50 states, the District of Columbia and five U.S. territories — to help small business owners," Weatherford said. "It builds on the momentum of the NAIC's highly successful Insure U consumer education program introduced a year ago."

Special Reports /

NAIC Launches Insure U for Small Business

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