A study by Next Insurance revealed 90% of small business owners don’t know if they have the right amount of coverage. The same study found 96% of small businesses can’t show they understand the basics of small business insurance.
We can therefore assume that most small businesses won’t know what to look for when searching for business insurance. Below, our guide clears up the doubts and tells you all you need to know about business insurance.
SME Guidelines to Business Insurance
Too many SMEs treat insurance like a box to tick after they’ve launched.
Getting the right policy starts with understanding what your business actually does. If you have staff, there are laws to follow tied to insurance (workers’ compensation insurance). If you sell products, there’s a different risk profile than if you only sell services. Insurance should follow the shape of your business.
You also want to be clear on what’s legally required. Workers’ compensation is often non-negotiable if you hire anyone. Commercial auto insurance is essential if you drive for work. General liability is 100% always worth having, even if it isn’t legally required. A 2025 study found only 54% of small U.S. businesses have general liability coverage, but 36–53% of small businesses face lawsuits annually.
Then there’s your budget. Selecting the cheapest cover might keep your costs down this month, but it can return as bad karma if something serious goes wrong. That said, you shouldn’t be paying for things you don’t need.
Getting advice from someone who understands small business insurance, such as Next Insurance, not just a salesperson, is our top tip.
Understanding Your Risks
Every business has risks. If you use a laptop to run your business, that’s a risk. If a customer ever walks into your office or shop, that’s another. If you store data or handle payments, you’re holding responsibility for more than your work.
You need to look at what could go wrong and ask yourself who would be affected. If a fire destroys your stock, would you recover without help? If your website crashes during a launch, how much would that cost you in sales? If a supplier fails to deliver, can you keep your promises?
Think about your customers too. Could they claim damages if your advice causes them a loss? Could they blame you if your product breaks? You need to think through scenarios even if they haven’t happened yet. And there are so many of them to consider.
Once you understand your risks, you can start mapping them to insurance. Again, we’d recommend speaking to an insurance provider.
Understanding Your Insurance Policy
Reading an insurance policy is full of clauses and fine print. It’s designed more for legal protection than human understanding. Still, you need to read it, or you won’t know what you’re paying for.
Start with the exclusions. What won’t your insurer cover? These are usually at the back, but they’re more important than the flashy benefits listed on page one. Some policies won’t cover theft unless there’s forced entry. Others won’t cover business interruptions unless the loss lasts a specific amount of time.
Look at your coverage limits. This is the maximum amount your insurer will pay out. If your business grows but your policy stays the same, you may be underinsured. This happens more often than you’d think, especially with new businesses that scale quickly.
Check what the policy expects from you. You might need to report incidents within a short window or keep to certain standards, such as regular maintenance or digital security.
Typical Claims Processes
The process usually starts with you contacting your provider. You’ll need to give details quickly and accurately. And trust us, they’ll ask so many specific questions to get every detail for the claim. That means dates, documents, receipts, and witness accounts, if you’ve got them. If you don’t, they might request them before processing a claim.
Then you deal with an assessor or claims handler. They’ll review your case and might ask for more information. If they send someone to inspect damage, keep records of everything as it looked right after the event.
Payouts can take time, especially for bigger claims. Having your paperwork ready helps things move faster. Don’t assume the insurer will chase you. Stay on top of your claim and follow up if needed.
SMEs should look for insurance that 100% safeguards their business. It’s a financial necessity. There’s no excuses when it’s so easy to set up a policy online.
