The business risk landscape is evolving rapidly—from cybercrime and climate disruptions to AI liability and employment lawsuits. Small and midsize business owners can no longer treat insurance as a checkbox. This guide breaks down seven of the most pressing risks in 2025, what to ask clients or teams, and what coverage options to consider before trouble hits.
1. Cyber Risk: Not Just a Tech Problem
What’s happening:
Cyber threats are booming—ransomware, phishing, business email compromise (BEC), and funds-transfer fraud are hitting every sector. In fact, ransomware surged by ~25% in 2024, and 82% of those attacks target businesses under 1,000 employees. Shockingly, 75% of SMBs couldn’t continue operating after a ransomware hit.
What to ask:
“How do you protect data, vendor access, and payment systems? Do you require MFA and training?”
Coverage to consider:
Standalone Cyber Liability policies that cover data breaches, payment fraud, ransomware, and legal defense.
2. Climate Risk Coverage Getting Harder to Find
What’s happening:
In wildfire/flood-prone zones like parts of California and LA, many businesses struggle to get affordable insurance—some policies are being non‑renewed or heavily restricted. Global weather-related payouts may reach $145 billion in 2025.
What to ask:
“Are you located in a high-risk zone? Have you updated your mitigation strategies?”
Coverage to consider:
Explore surplus or excess lines, parametric triggers, Difference-in-Conditions (DIC), and business interruption policies.
3. Employment Practices: Claims on the Rise
What’s happening:
Remote work complications, layoffs, and HR missteps are fueling claims—EPLI now covers wrongful termination, harassment, and discrimination.
What to ask:
“How are your hiring/firing and remote-work protocols structured?”
Coverage to consider:
Employment Practices Liability Insurance for defense and settlement costs.
4. Contractor vs. Employee: Audit & Fines Risk
What’s happening:
Misclassifying workers as contractors can trigger audits, payroll liabilities, and fines.
What to ask:
“Do you review 1099 vs. W-2 statuses? Who handles payroll classification?”
Coverage to consider:
Workers’ Comp with accurate class codes, and employment practices or audit assistance coverage.
5. Inflation: Policy Limits May Be Too Low
What’s happening:
Construction and material costs have jumped 20–30%, often leaving business insurance underinsured.
What to ask:
“Have we recalculated replacement cost values lately?”
Coverage to consider:
Increase building limits, inflation guards, agreed-value endorsements, or blanket limits.
6. Reputation Risk: One Bad Post Can Hurt
What’s happening:
Negative reviews, social media backlash—even against small firms—can spiral fast.
What to ask:
“Have you faced PR issues? How did you handle them?”
Coverage to consider:
Crisis management and reputation repair endorsements—sometimes available under cyber or EPLI.
7. AI & Automation: New Tools, New Risks
What’s happening:
AI tools or chatbots might err—leading to liability or client harm.
What to ask:
“Do you use AI in client-facing work? Are results always human reviewed?”
Coverage to consider:
Errors & Omissions (E&O) for tech/business services, plus cyber policies with AI-specific endorsements.
Managing risk is a critical part of running a successful business. We’re here to help ensure your company complies with state regulations and arrange coverage to transfer potential risks from your operations to a trusted insurance carrier.
If your business assets or exposures require specialized coverage, consider a complimentary Commercial Insurance Review with UWIB Risk. This thorough assessment can identify gaps in your current policies and provide tailored solutions to protect your business effectively.
Take the first step towards comprehensive protection. Schedule your cost-free Commercial Insurance Review today!