Running a business takes a huge amount of skill and organisation, not to mention a decent level of funding, but unfortunately it seems that a lot of smaller businesses aren't as prepared as they should be.
Research from AXA Business Insurance has revealed that a large proportion of SMEs (small and medium enterprises) have failed to consider one of the most important pieces of the business puzzle – insurance. Many are operating without the necessary cover in place and in some cases they're even breaking the law in the process, and that could have a huge impact on a business' future.
Among the figures it was revealed that four in ten SMEs don't have suitable cover for their business vehicles, while 52% of those that offer business advice don't have professional indemnity insurance. Both of these are huge oversights – your regular car insurance won't cover you if you're using your vehicle for business purposes, and if you offered advice which turned out to be wrong you could be held accountable and therefore liable to make any compensation payments out of your own pocket.
What's even more worrying, however, is that 53% of small firms that are required – by law – to have employers' liability cover fail to have it in place. Not only could you again be held liable should someone you employ fall ill or be injured as a result of their working activities, but you could be fined £2,500 for each day you're without cover as well as an additional £1,000 for not displaying a valid insurance certificate, something which 23% of those surveyed failed to do.
There are also clear gaps in cover for those that operate from home. Many don't have insurance at all and 56% failed to notify their insurer that they were running a business from home, while just 22% had cover for business equipment and over three quarters failed to have personal accident cover.
It isn't something that should be overlooked, as Darrell Sansom, managing director of AXA Business Insurance, says: "Insurance may feel like one of the little bits of admin that you ought to sort out at some point but not having it can have big consequences. Claims for liability can run into millions of pounds and not having cover in place is putting you, your business, your employers, clients and others at risk."
Happily, it needn't be that difficult to arrange suitable cover. While some areas will require specific types of business insurance, such as employers' liability or professional indemnity, other forms of cover could be incorporated into regular insurance policies.
For example, if you occasionally use your car for business purposes, speak to your insurer to see if you can arrange an add-on level of business cover. The same could apply to the likes of home insurance, equipment cover and personal accident – you might find you don't need an entirely separate policy but could instead incorporate your business activities into your current insurance.
As with all types of insurance it's all about being prepared, and with your livelihood at stake, it's important to consider all the options so you can run your business with the level of protection you need.
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Disclaimer: Information is correct as of the date of publication (shown at the top of this article). Any products featured may be withdrawn by their provider or changed at any time.
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