Nearly one in four Canadian small business owners say they do not currently have business insurance, even as nine in 10 report experiencing an unexpected challenge, pressure or setback over the past year, according to a new TD Insurance survey.
The survey also found that more than half of small business owners could not cover an unexpected expense exceeding $10,000 without assistance, while nearly six in 10 said they find understanding business insurance difficult or frustrating.
Businesses facing change and financial pressure
The findings point to a gap between the risks small businesses face and their approach to insurance. More than two-thirds of respondents said unexpected challenges over the past year had caused them to rethink how they plan for risk, while 87 per cent experienced a significant business change, such as expanding products or services, entering new markets, hiring staff, purchasing equipment or investing in new technology.
At the same time, 57 per cent said they had faced direct financial pressures, including rising costs, cash-flow challenges or slowing customer demand. Three-quarters of owners said they felt they had taken the right steps to strengthen or protect their businesses over the past year.
"As change becomes constant, preparedness may be more important than ever. From rising operating costs and economic uncertainty to new opportunities for growth," said Tang Trang, vice-president, Small Business Insurance, TD Insurance. " While it's encouraging that most business owners report having business insurance, our findings suggest there is still a gap in understanding how coverage can help support and protect their business as it grows. When unexpected events happen, having the right protection in place can make a meaningful difference in a business's ability to recover, adapt, and move forward."
The survey found that 59 per cent of owners consider understanding business insurance difficult or frustrating. Common challenges identified included determining what is covered, how much coverage is required and which risks are specific to an industry.
Although 76 per cent agreed that insurance should be an integral part of business planning, 23 per cent remained uninsured. Another 24 per cent viewed insurance as a cost to minimize.
Insurance and business growth
The survey also found differences in how insured and uninsured business owners viewed their prospects for the coming year. Seventy-three per cent of insured owners said they felt their business was positioned to grow and succeed, compared with 58 per cent of owners without insurance.
Insured owners were also more likely to say they planned to prioritize growth and expansion, at 63 per cent compared with 49 per cent among uninsured owners. Twenty per cent of insured owners said they planned to prioritize investment in technology and digital tools, compared with 11 per cent of uninsured owners.
Among insured business owners, 72 per cent said they had reviewed their coverage during the past year. Nearly two-thirds said business growth would prompt them to update their insurance coverage.
"Many business owners wear multiple hats every day, and reviewing insurance coverage often falls behind more immediate priorities," added Trang. "That's why having access to clear, trusted guidance can help business owners understand their risks and choose protection that reflects how their business operates today, so they can focus on growth."
The survey also found that 75 per cent of small business owners believe they have taken the right steps to strengthen or protect their business over the past year.