March 27, 2026 · 5 min read
The Real Cost of Being Underinsured: What 75% of SMBs Don't Know
By Don Janacek, Founder & CEO
75% of US small businesses do not carry sufficient insurance coverage, according to the 2023 Hiscox Underinsurance in Small Business report. A separate analysis from Insurance Thought Leadership found that 87% of small businesses are underinsured in at least one coverage area.
These are not fringe businesses. These are contractors, restaurant owners, trucking companies, manufacturers, and healthcare providers who believe they are covered. They have insurance. They pay premiums. They trust their broker. And they have gaps they do not know about.
The Data
75% underinsured (Hiscox 2023). The Hiscox Underinsurance in Small Business Report surveyed US small businesses and found three-quarters lack sufficient coverage for their actual risk profile.
$264,000 average cyber claim (Acrisure 2024). The average cost of a cyber incident for an SMB is $264,000. Most SMBs either have no cyber coverage or limits far below this figure.
40% of small businesses never reopen after a major uninsured loss. When a significant claim is denied due to a coverage gap, the business absorbs the full financial impact. For many, this means closure.
Types of Underinsurance
Wrong coverage type. You have general liability but not pollution liability. You have workers comp but not EPLI. You have commercial property but not equipment breakdown. Each missing coverage type is an uninsured risk.
Limits too low. You carry $1M in umbrella coverage. Your contracts require $5M. You carry $1M in cyber coverage. The average incident costs $264K. If two incidents hit in one policy period, you are exposed.
Missing endorsements. Your GL policy excludes pollution. Your commercial auto does not include hired and non-owned. Your property policy does not cover equipment breakdown. These are endorsements that extend coverage to specific risks, and they are often missing.
Excluded risks. Standard policies contain dozens of exclusions. Pollution, professional services, employment practices, cyber, product recall. If your operations touch any of these areas, the exclusion creates a gap.
The Math
CoverageShield costs $49 per month for the Shield plan. That is $588 per year.
The average uninsured commercial claim costs approximately $68,000 based on industry loss data across common coverage gaps.
One denied claim. One missed endorsement. One contract requirement you did not know about. The cost of not knowing is orders of magnitude higher than the cost of checking.
How to Check
You do not need to wait for your annual renewal. You do not need to hire a $100,000 risk manager. Upload your policies to CoverageShield and see your gaps in 60 seconds.