The Hiscox Global Protection Gap Report 2025

However, our first-ever Global Protection Gap Report reveals that many SMEs may be underinsured, which can increase financial vulnerability and limit long-term growth. 

Using survey responses from 6,250 small business owners with 1-50 employees, our report explores the issue of underinsurance across six markets: the United Kingdom (UK), the United States (US), France, Germany, Spain, and Portugal. 

Most SMEs report some level of coverage. However, misunderstandings about the scope of cover, outdated policies, and limits that have not kept pace with growth contribute to gaps in protection. 

Read our report to learn more about key protection gaps and some tips to help prevent them.

UK SMEs are among the most underinsured 

Underinsurance appears to be widespread across all surveyed markets. In 2025, 74% of UK SMEs report some level of underinsurance – on par with Spain and France. 

The US reports the highest rate of potential underinsurance at 77%, while Germany (70%) and Portugal (70%) record the lowest. 

Overall, 74% of surveyed SMEs may lack adequate coverage and are at risk of being underinsured. 

Additional key findings include: 

• 65% reported cover limits that are unlikely to keep pace with business growth.
• 33% haven’t reviewed or updated their public liability cover in over three years.
• 72% of firms without cyber cover are exposed to cyber risks via their core systems.
• 24% didn't buy insurance for their small business until they made a profit.
• 92% are kept up at night by possible threats to their business.
• 22% have a protection gap due to not purchasing core coverages such as professional indemnity, public liability, property, and employers’ liability. 

State of coverage 

Many SMEs take a ‘set-it-and-forget-it’ approach to insurance, which can put small business owners and their livelihoods at risk. One in three businesses haven’t reviewed or updated their insurance policies in three years or more. This includes: 

• 33% for public liability cover.
• 29% for property cover.
• 28% for cyber cover. 

Coverage limits may also be too low to provide sufficient protection. Across all markets, 65% have less than £1 million in public liability cover, and 60% have less than £1 million in professional indemnity cover. 

Rightsizing small business insurance 

While growth has been strong for many small businesses, insurance coverage has not always evolved in step. Among firms established for three years or more: 

• 69% reported revenue growth over the past two years.
• 30% saw increases exceeding 5%. 

Despite this progress, many continue to rely on insurance policies designed for their start-up phase. As firms expand, this can leave gaps in protection if cover levels are not adjusted to reflect new risks and higher turnover.

Fewer than half of SMEs who reported revenue increases hold key protections, with only 47% carrying public liability insurance and just 40% holding professional indemnity cover. Among those who do have policies: 

• 33% have not updated their public liability insurance.
• 31% have not updated their professional indemnity insurance. 

"A common risk we see across specialist sectors is assuming an old policy still fits today’s business. As operations evolve, outdated cover can leave gaps. With 33% of small businesses not reviewing their public liability in over three years, regular policy checks are essential to stay properly protected." - Peter Treloar, Interim Chief Underwriting Officer, Hiscox UK 

SMEs are under-informed and underinsured 

Small business owners may not realise how exposed they are. Many believe they’re protected against risks their policies don’t cover. 

More than half were unable to accurately describe what’s covered by professional indemnity (80%), cyber insurance (77%), and public liability insurance (65%), while three-quarters have misconceptions about what their policy protects against. 

These gaps create a false sense of security, which can leave businesses vulnerable when unexpected events occur. For example: 

• 70% assume public liability covers fire or flood damage, or legal claims related to advice. However, it doesn’t cover damage to a business’s own property or advice-related claims. Instead, it's designed to protect against third-party claims for injury or property damage caused by the business's activities.
• 70% believe professional indemnity would cover someone slipping on their premises, but this falls under public liability insurance. 

Understanding what a policy does and doesn’t cover can help close the protection gap and ensure that businesses acquire sufficient coverage for their needs. 

Delayed insurance adoption 

Most business owners (53%) understand that the best time to buy insurance is before selling their first product. Yet many delay getting protection: 

• 24% wait until they are making a profit.
• 23% hold off until they are working on the business full-time. 

Such delays can leave them vulnerable during critical early stages. Speaking to a specialist broker early on can help tailor your insurance coverage to your current needs. 

Risk awareness 

The majority (92%) of surveyed SMEs said they’re kept up at night by threats to their business. 

Overall, the top concerns are inflation or rising costs (41%) and an economic downturn (37%). The top insurable concerns are: 

• Theft or property damage (34%).
• Cyber attacks or data breaches (33%).
• Workplace accidents or employee injuries (32%). 

Despite acknowledgement of these risks, there’s still a gap between awareness and action. For example, 54% of respondents said customers visit their premises, yet less than half have public liability insurance to protect them if an accident occurs on site. 

What UK SMEs worry about 

In the UK, SMEs are most concerned about cyber attacks or data breaches (38%), followed by workplace accidents or employee injuries (35%) and theft or property damage (33%). 

Tips for small businesses 

Our report includes some tips that small business owners may find useful in safeguarding against key risks and building resilience. Please note that these tips do not constitute professional advice. 

1. Understand your personal risk landscape. 

Identifying and preparing for financial, legal, and operational risks can help build resilience. This should reflect the various things that could go wrong, including customer interactions, supply chain dependencies, and regulatory exposures. 

Common insurance claims include slips and trips on their premises, or loss or theft of business equipment. 

2. Reassess insurance needs regularly 

Reviewing your cover annually – or sooner if revenue, headcount, or operations grow by 20% – can help you reduce the risk of underinsurance, avoid paying for cover you no longer need, and determine whether policy limits are up to pace with growth. 

3. Stay updated on industry and regulatory changes 

Many businesses face similar challenges. You can share knowledge and gain fresh insights by engaging with trusted advisory sources, participating in relevant industry forums, and monitoring relevant regulatory changes.

4. Use the Protection Gap Checklist 

The Hiscox Global Protection Gap Report 2025 includes a checklist to help you identify which types of insurance your business may need based on your specific activities. See page 13. 

Download the report

The value of learning lessons 

Regular reviews, clear understanding, and proactive planning can help businesses stay secure and focused on growth.

Disclaimer:

The Hiscox Cyber Global Protection Report shares insights into the issue of underinsurance among SMEs. It should not be taken as professional advice. For guidance specific to your business, please seek independent professional support.