66% of Small Businesses Lack Business Interruption Coverage: Survey

Nearly 75 percent of small businesses say they don’t have a disaster recovery plan in place. For companies with fewer than 50 employees, just one in five – or 18 percent – have one, according to a new Nationwide-sponsored survey.

Those low numbers also reflect a lack of relevant insurance coverage, with 66 percent of respondents not having business interruption insurance.

Nationwide commissioned the survey from Harris Interactive, which polled 500 U.S small business owners online in June with fewer than 300 employees. Mark Pizzi, president and chief operating officer of Nationwide Direct and Member Solutions, said that small businesses’ lack of planning in terms of disaster recovery is unfortunate and potentially quite costly.

“Small businesses are least likely to have disaster recovery insurance. And yet they are the ones most affected by a disaster. That’s why it’s essential for small businesses to have a disaster recovery plan,” Pizzi said in prepared remarks.

Nationwide said the lack of a major national disaster in several years may be leaving small business owners overconfident. The insurer said they must plan more, however, as the summer storm season commences.

Among the small business owner survey findings:

• More than half of respondents said it would take them at least three months to recover from a disaster.
• 38 percent – more than a third – of small business owners believe it isn’t important for their businesses to have a disaster recovery plan.
• 26 percent – one in four – said that they believed there was a slim chance that a natural disaster would occur in their area.
• 37 percent said climate change and El Nino made it less likely that natural disasters would impact their business.
• 69 percent said they have an evacuation plan at home.
• For businesses without a disaster recovery plan, 34 percent said it was a low priority. About 11 percent of respondents said that time, and 15 percent – cost, didn’t really affect their decision to not have a plan in place.
• If a disaster hit, 44 percent said they don’t have access to generators if disaster hit.

Topics Trends Commercial Lines Business Insurance