Survey: 61% of Canadian Small Businesses Are Uninsured. Most Say They Don’t Need It

And the timing makes that gap worse. Eight in 10 (81%) owners are running on lean or critical cash reserves, and a combined 46% say they won’t last a year at this rate. In other words, the businesses least able to absorb a loss out of pocket are the ones most likely to have no coverage.

How Many Canadian Small Businesses Have Business Insurance?

Only 39% of Canadian small business owners have a business insurance policy. The remaining 61% have no coverage at all – down slightly from 62% in 2025, but nearly double the 33% who said the same in 2024.

So we asked the uninsured, “Why not?” The answers weren’t “I can’t find a policy” or “it’s too confusing.” The most common reason, from 29%, was simply “I don’t think I need it.” Another 27% said their businesses are too small or too new to need coverage. Cost came up (21%), sure, but the dominant theme wasn’t price. It was a belief that the risk just doesn’t apply to them. 

We then asked: if something went seriously wrong tomorrow (a fire, water damage, a break-in or lawsuit) and they had no insurance, how would they cover it?

Among uninsured owners, 38% said they don’t believe their businesses face those kinds of risks at all, and another 27% have no idea what they’d do. Put those together, and roughly two-thirds of the uninsured are potentially facing significant financial risks. A handful named the alternatives out loud: sell the business, declare bankruptcy, or borrow from family. 

Meanwhile, 22% of all owners flat-out told us their businesses have no risks.

These findings bring the uncomfortable truth to the forefront – the most dangerous risk to a significant portion of Canadian small businesses in 2026 isn’t the economy. It’s the conviction that nothing bad will happen to them, so they don’t think they need business insurance.

What Are the Most Common Risks Small Businesses in Canada Face?

The single biggest risk owners report isn’t fire or theft. It’s customers who refuse to pay for completed work, which 29% named as their most significant risk. Cyberattacks and data breaches came second at 14%.

That may surprise people, but it shouldn’t. Ask owners what actually keeps them up at night, and it’s not a natural disaster; it’s the client who takes the work and stiffs the invoice.

Here’s the part worth sitting with: an unpaid invoice, a cyberattack, a slip-and-fall – these aren’t rare catastrophes. And most of the owners naming them have nothing standing between the incident and their own bank account. 

What’s Driving the Squeeze on Canadian Small Businesses?

Canadian small businesses are absorbing real financial pressure in 2026:

• 59% say the economy has hurt their business this year, down slightly from 62% last year
• 43% report lower revenue than the first half of 2025
• 71% have watched their operating costs climb
• 81% have enough cash to cover three months of expenses or less, and 38% are operating month-to-month with little or nothing in reserve

Inflation is the single biggest concern for business owners in 2026 (35%), followed by the pressure of raising prices without losing customers (23%). Gas prices landed third (13%), and they’re biting: 58% of owners say rising fuel costs have hurt their businesses. For anyone who drives to a job site, delivers a product, or owns a business vehicle, that’s a tax on every workday.

To cope, most owners are playing defence: 53% have cut non-essential spending, while 39% have raised prices. More concerning, four in 10 (39%) have funded their businesses with personal credit cards or home equity this year – meaning business risk and personal risk have quietly become the same risk.

And the human cost is real: nearly half of owners (47%) have seriously considered permanently closing this year, with one in four thinking about it monthly or more.

Canadian small business owners are remarkably resilient. They’re absorbing higher costs, thinner revenue, and shrinking reserves, yet they’re still showing up, serving their customers and refusing to quit. That grit is real, and it deserves respect. But grit doesn’t pay a legal bill. And with reserves this thin, “I’ll cover it myself” isn’t a plan – it’s a hope.

Is the “Buy Canadian” Movement Actually Helping Small Businesses?

For most small businesses, the “Buy Canadian” movement hasn’t moved the needle: only 17% report any real lift in customers or revenue, while 38% say it’s made no difference at all.

It’s been everywhere – the flags, the shelf labels, the social campaigns. But on the ground, the bump is modest. Just 6% of owners report a significant increase in the number of Canadian customers choosing them. Another 11% saw a small uptick. A hopeful 18% say it’s too early to tell.

Perhaps next time your business needs supplies, consider supporting a local business owner in your community who can provide them.

How Is AI Affecting Small Businesses in Canada?

Our survey also finds that artificial intelligence (AI) hasn’t lived up to the hype for most small businesses yet: 59% report little to no impact or aren’t even sure how AI applies to them.

For all the noise, AI is still mostly background hum for Canadian small businesses. A third of owners (32%) say it’s had little to no impact so far, and another 27% aren’t sure how it fits their businesses at all. Only 9% credit it with a meaningful boost to productivity or costs, while 36% have no significant concerns about AI.

Owners aren’t panicking about robots. They’re just not convinced the tools are built for a two-person shop yet.

What Would Small Businesses Do With a $10,000 Business Grant?

Growth didn’t win. Survival did. Given a $10,000 business grant, nearly half of owners would bank it or put a dent in debt, with 26% saying they would save it to build cash reserves, and 20% would pay down debt rather than invest in growth. Buying tools and equipment came next at 17%. Hiring? Just 3%.

We love this question because it’s a mood ring. Hand someone free money and watch what they instinctively reach for. That instinct tells you exactly where owners’ heads are in 2026: protect what they’re building before trying to grow.

Note: This is why we run the Zensurance Small Business Grant multiple times per year. Sometimes, a little breathing room is what keeps a good business running.

Why Does Every Small Business Need Insurance?

If you’re in the 61%, this is the part worth reading twice. Here’s what coverage actually does for a small business:

Defending Against Costly Lawsuits and Unforeseen Mishaps

Recovering from a fire that wipes out your inventory, the cost of a customer injury, or a lawsuit is a brutal financial hit – usually more than a year’s worth of insurance premiums.

Legal defence alone can run into hundreds of thousands, even if you win. And it’s not just you who expects coverage: A separate 2024 Zensurance study found 96% of Canadian consumers believe it is “very important” for small businesses to be insured.

The Limitations of Personal Auto and Homeowner Policies

Your personal car and home policies are built for personal life, not your business. Most exclude commercial use and business-related liability outright, and even if they don’t, the coverage limits are usually too low to cover what your business actually owns.

Strengthening Your Financial Foundation

Full-time profession or a side hustle, no business is risk-free. Insurance is how you keep going when something breaks, and it’s also a key that opens doors. 

You often need it to land a loan, sign a commercial lease, drive a business vehicle, or stay compliant with provincial and industry rules. And handing a client your certificate of insurance? Instant credibility that tells them you’re the real deal. 

Frequently Asked Questions About the State of Canadian Small Businesses in 2026

How many Canadian small businesses have business insurance? 

Only 39% of the small business owners we surveyed have a business insurance policy. The remaining 61% are uninsured, and the most common reason given was simply believing they don’t need it (29%). 

Why do small business owners go without insurance?

The most common reason isn’t cost. Nearly a third of uninsured owners (29%) simply don’t think they need coverage, and another 27% believe their business is too small or too new to require it. Only 21% cited expense as the main barrier. 

What is the most common risk facing small businesses? 

The most frequently cited risk is customers refusing to pay for completed work (29%), ahead of cyberattacks and data breaches (14%). Many owners underestimate everyday operational risks like these. 

What happens if a small business has no insurance and something goes wrong?

Most uninsured owners don’t have an answer. In our survey, 38% said they don’t believe their business faces those risks at all, and 27% didn’t know how they’d cover the cost. Others named selling the business, declaring bankruptcy, or borrowing from family. 

How are Canadian small businesses doing in 2026?

Most are under significant financial pressure. In our survey of 1,000 owners, 59% said the economy has hurt their business this year, 43% reported lower revenue than in the first half of 2025, and 71% reported higher operating costs. Despite this, about half remain confident about the next six months.

What is the biggest challenge facing small businesses in Canada right now? 

Inflation is the top concern, cited by 35% of owners. The second-biggest worry – raising prices without losing customers – was named by 23%, reflecting the squeeze between rising costs and price-sensitive clients. 

How financially stable are small businesses in Canada? 

Reserves are thin – 81% of owners have enough cash to cover three months of expenses or less, and 38% operate month-to-month with little to no reserve. A quarter say they could endure current conditions for six months or less. 

Has AI changed how small businesses operate?

Not yet; 59% report little-to-no impact from AI or aren’t sure how it applies to their businesses, while only 9% credit it with a meaningful boost to productivity or a reduction in costs.

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– Reviewed by Brandon Bowie, Senior Broker and Team Lead, Professional Lines, and Marc Gorbet, General Counsel, Zensurance.

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