2024 U.S. Chamber of Commerce data states that small businesses fuel 99% of the American business economy. That’s 33.2 million small businesses employing 61.7 million Americans.
The actual definition, as per the U.S. Chamber of Commerce, of a small business is a company with fewer than 500 employees. We wouldn’t call that a small business, but we would call it an SME.
Being the majority of the U.S. business economy doesn’t mitigate the risks. SMEs need business protection, but what does that include? Read on to find out.
Why SMEs Need Business Protection
You can have everything in place—from an incredible marketing plan to a lean budget—but none of it matters if you’re not protected. One lawsuit, flood, or accident can sweep away years of work in a week. Most SMEs underestimate the risk. They believe size will somehow shield them. They think being “small” means they’ll go unnoticed by threats.
Protection gives SMEs breathing room. It helps them bounce back. It gives them the freedom to take calculated risks instead of playing it safe out of fear. And that’s what makes it more than a box to tick.
Common Ways SMEs Get it Wrong
Many business owners know they need coverage, but they get caught in traps. They either guess what they need or trust their business advice from five years ago. Here are some of the common ways we know SMEs can get it wrong.
- They buy the cheapest plan and hope for the best.
- They forget to update policies when they grow.
- They don’t read the fine print and then get shocked when something isn’t covered.
- They think cyber attacks only happen to large corporations (it’s the opposite).
- They assume one type of insurance covers everything.
The Types of Protection Available to SMEs
Not all protection is created equal. Here are the types of protection available to SMEs:
- General Liability Insurance: This covers the basics. If a client slips in your office or a product causes damage, you use general liability insurance.
- Property Insurance: This applies whether you run a brick-and-mortar shop or just have a home office with equipment. Fires, floods, theft—they all fall here.
- Professional Liability Insurance (Errors & Omissions): If your business gives advice, makes designs, or provides services, this is the insurance you want.
- Cyber Insurance: Small businesses are hit hardest by cyber attacks. For example, Strong DM statistics show small businesses receive targeted malicious emails at a rate of one for every 323, the most of any size business.
- Workers’ Compensation: It’s legally required in most states, other than Texas, if you have employees.
- Business Interruption Insurance: This helps cover the income you lose while fixing issues that caused interruptions.
- Commercial Auto Insurance: Essential if you or your employees drive for work.
You won’t need all of these, but research what you do need.
The Average Cost of Insurance for SMEs
Here’s an overview of the average cost of insurance for SMEs:
- General liability insurance is around $40 to $60 per month.
- Professional liability insurance can cost between $50 and $80 monthly.
- Cyber insurance can vary, but many SMEs pay between $100 and $150 monthly.
- Business owner’s policies (bundled coverage) are the most expensive. Most policies start at $500 annually.
Location, number of employees, and risk category all factor into the cost. A tech consultant in rural Idaho pays less than a commercial bakery in downtown Los Angeles.
The biggest mistake is thinking of insurance as something you buy once. It’s not. It’s something you review regularly. Your risks change. Your team grows. Your revenue shifts. Your protection should grow with you.
SMEs are the lifeblood of every economy. They’re driven by grit, creativity, and hustle. But grit can’t fix a lawsuit. Creativity won’t pay for a fire-damaged warehouse. Hustle can’t undo a data breach. Protection isn’t the exciting part of business, but it’s the part that lets everything else keep going.
