Most small business owners still think cyber threats don’t apply to them. That outdated mindset is exposing them to risks they’re not insured to survive.
Cyber liability is no longer a “big tech” problem. In 2023, the average cost of a data breach for small businesses exceeded $4.35 million, according to IBM. And yet, many still don’t carry cyber coverage or carry limits too low to reflect today’s realities. The same goes for liability and business interruption insurance, where inflation, litigation, and global disruption have dramatically raised the stakes.
Thomas Watson (pictured), president of Guardsman Insurance Services Inc., said that he’s watched too many clients underestimate their risk profile. With over two decades of experience in the industry, he now spends most of his time educating business owners on what they don’t know - and helping them upgrade legacy thinking before it’s too late.
That same mindset shift applies to business interruption insurance. Where 12 months of coverage was once considered standard, Watson said that’s no longer enough.
“Looking at supply chain issues now, they really do need to start considering the 18- and 24-month timelines,” he said.
Disruption from global conflicts, extreme weather, and economic volatility means a return to normal operations can take far longer than it once did. Failing to plan for that, Watson warned, could mean never reopening at all.
Liability insurance is also under pressure to catch up to today’s risks. For years, $2 million in coverage was the go-to limit for small and mid-sized businesses. That number is quickly becoming outdated.
“We’re seeing a lot more clients looking at $5 million limits, and increasingly $10 million,” he said.
Even businesses that haven’t faced more claims are seeing the impact. When claims do happen, they’re often larger, longer, and more legally complex.
“The claim trend is not more frequent claims, but the claims when they are occurring are becoming more severe,” Watson said.
In that environment, directors' and officers' coverage, excess liability layers, and broader umbrella policies are gaining traction. And Watson noted that some of his clients have already been grateful for those higher limits - especially when lawsuits come knocking.
Still, the hardest part for many businesses isn’t just buying coverage - it’s recognizing that these risks apply to them at all.
“Just because they’re a small business [that] doesn’t make the risk any less complex,” Watson said.
That sense of invincibility is common among small firms, but Watson said it’s exactly what makes them targets. From cyberattacks to liability claims, smaller operations often lack the defenses and redundancies that larger corporations have in place.
“Small doesn’t mean non-complex,” he said. “You still have a lot of complexity that goes into that, and your insurance and risk management programs need to reflect that.”
For Watson, cutting through that denial starts with showing up. While many brokerages do visit clients, he said that his approach emphasizes spending as much client-facing time as possible on-site, whether it’s for renewal meetings, policy delivery, answering questions, or reviewing property and risk control measures firsthand.
“We really do focus on what we like to call the local advantage,” Watson said. “Usually, if they want to go over something… we’ll just physically go to their office, go to their warehouse, whatever it is they need.”
That hands-on approach can make a difference when a crisis hits. He recalled one client’s rental property flooding - and how Guardsman showed up with three generators and sump pumps in hand, beating the disaster response team on site.
“I showed up at his house with three of those generators,” Watson said. “We started getting the basement pumped out before the disaster companies could even get there.”
In an industry dominated by call centers and automation, that kind of personal response is becoming rare. And it’s the reason Watson champions local brokers who know their clients well.
“Pick up the phone, ask to speak to my broker. I can talk to him. He knows my file,” he said.
