One in 20 SMEs do not have insurance, according to research by LV= Broker. The study revealed that 200,000 small and medium-sized businesses in the UK are trading without insurance, and a further 15% have no financial contingency plan in place should they be unable to trade.
80,000 small businesses also admitted to having no employer’s liability insurance, despite this being a basic legal requirement for companies that employ staff.
The omission leaves employers open to prosecution and fines of up to £2,500 per day.
Reasons for not having insurance included not seeing a need for cover (38%), affordability of cover (21%) and ploughing all profits back into the business (10%).
LV= Broker commercial lines director Mike Crane said: “SMEs are the lifeblood of the British economy and it’s great to see that so many have increased their turnover in the past year and taken on more staff. However the research shows that thousands are leaving themselves vulnerable to prosecutions and fines for not having appropriate insurance in place.
“Getting the right advice on cover from a specialist insurance broker is invaluable for business owners and can make the difference between being able to continue trading or not should the worst happen.”
The research comes at a time when the SME sector has a promising future in the UK, with 75% of SMEs maintaining or growing turnover in 2014.
Furthermore, more than a fifth of SMEs included in the study had taken on more staff during 2014, with 4% employing their first member of staff.