The Digital Shift in Small Business Insurance: A New Era of Convenience

In today’s fast-paced world, speed and convenience are paramount for small business owners. As they navigate the complexities of running a business, many are turning to digital solutions for their operational needs, including insurance. A recent survey conducted by NEXT Insurance reveals a significant trend: small business owners are increasingly opting for online platforms to research, compare, and purchase insurance coverage without the need for an agent. This article delves into the findings of the survey and explores the implications of this digital shift.

The Rise of Online Insurance Purchases

61% of Small Business Owners Buy Insurance Online

The traditional methods of purchasing business insurance—such as in-person meetings with agents or phone consultations—are rapidly losing favor among busy entrepreneurs. According to NEXT’s survey of 1,500 small business owners conducted in January 2025, a remarkable 61% now buy their insurance online, either directly from insurance companies or through financial services. This marks a significant shift from the 40% who still rely on traditional brokers or agents.

Supporting this trend, a previous PwC global survey found that 48% of small businesses prefer to buy insurance online. Among those, half purchase directly from the insurance provider, while 28% utilize comparison sites or apps. Only 10% indicated they would use a broker or agent’s website.

The DIY Approach to Research

The survey also highlighted a growing trend of self-education among small business owners. Approximately 24% of participants reported researching their insurance needs online before making a purchase, while only 17% sought advice from an insurance agent. Other sources of information included friends, family, and mentors (13%), as well as professional groups and trade associations (8% each).

This shift underscores the need for insurers to enhance their digital presence and provide educational resources that empower business owners to make informed decisions.

Understanding the Motivations Behind Insurance Purchases

A Three-Way Split in Motivations

The motivations for purchasing small business insurance can be categorized into three main buckets, each representing roughly equal portions of survey respondents:

Legal Compliance (22%): Some business owners opt for the minimum coverage required to comply with legal standards.
Maximum Protection (21%): Others seek comprehensive coverage to protect against a wide array of risks, often investing in a broad portfolio of insurance.
Selective Risk Coverage (21%): A significant number of owners prioritize specific policies that address targeted risks relevant to their operations.

These findings suggest that insurers must offer flexible, tailored solutions that cater to the diverse priorities, budgets, and risk appetites of small business owners. A one-size-fits-all approach is no longer viable.

Interestingly, about 36% of respondents expressed the belief that they do not need small business insurance, indicating a potential gap in awareness regarding the importance of coverage.

The Knowledge and Coverage Gap

Insufficient Understanding of Insurance Needs

Despite the increasing trend toward online purchasing, NEXT’s research indicates a troubling knowledge gap among small business owners regarding their insurance needs. A staggering 90% lack confidence in the adequacy of their coverage, and 96% fail to demonstrate a basic understanding of general liability insurance, one of the most common policies sought by business owners.

Moreover, a separate survey of restaurant owners revealed that 38% lacked insurance in 2025, up from 29% the previous year. This highlights a critical need for education and awareness in the small business community.

Five Tips for Small Business Owners

To navigate the complexities of small business insurance effectively, owners should consider the following five tips:

Rely on Digital Tools: Utilize online resources to compare policies and obtain customized quotes that align with your specific needs.

Ask for Customized Policies: Avoid generic coverage. Request tailored options that address your unique risks and ensure you’re not paying for unnecessary coverage.

Seek Transparency: Insist on clear explanations from insurers regarding policy terms, pricing, and claims processes to avoid gaps and surprises.

Understand Your Risk Exposure: Go beyond legal requirements. Conduct a risk assessment to determine the appropriate coverage level for your business, location, and operations.

Prioritize Education: Look for insurers that provide educational tools and guidance to simplify the insurance decision-making process.

Conclusion

The digital transformation in small business insurance is reshaping how entrepreneurs approach their coverage needs. As more business owners turn to online platforms for research and purchasing, it is essential for insurers to adapt by enhancing their digital offerings and educational resources. By doing so, they can empower small business owners to make informed decisions and secure the coverage necessary to protect their ventures against unforeseen risks.

For more insights and resources on small business insurance, visit NEXT Insurance.