One in 10 small businesses without insurance
Study reveals businesses leaving themselves financially vulnerable to unexpected events
One in 10 small and medium businesses in the UK have no insurance cover and two thirds have no business interruption insurance cover, leaving them vulnerable to incidents that disrupt their business, according to a new study.
A survey of 1,500 small and medium-sized business owners commissioned by insurer Aviva found that 62% of respondents – equivalent to around 2.9m businesses nationwide – did not have business interruption insurance, or were not sure whether it was included in their current policy.
Business interruption insurance covers the financial loss to businesses should they suffer an incident which interrupts the normal course of business, such as the founder suffering a serious illness.
Despite two-thirds of small and medium-sized firms not having cover, Aviva’s figures found just over one in five firms (21%) said they had experienced disruption to their business themselves, with a quarter of these respondents taking up to three months before normal business was resumed.
Of these, 42% admitted they had to borrow money from friends and family, take out bank loans, or use their own savings to fund their recovery after such a business interruption.
Robert Ledger, head of small business at Aviva, said: “We never want to think about the worst case scenario but when it comes to protecting your business, taking a few simple measures now could make a huge difference to your recovery. Ask yourself if you could afford to pay costs like wages from your own pocket until the business is back to being fully operational. If not, you should check you have business interruption insurance included in your policy.
“You should also consider creating a business continuity plan. It is quite straightforward – for a lot of small businesses it could be done in the time it takes to have coffee and a sandwich, and will play a vital role in helping you understand and manage any risk to your business operations, as well as helping assess the level of business interruption insurance you may need.”