230,000 small businesses have no insurance, LV= finds

One in 20 small business owners have no insurance cover in place – equivalent to 230,000 businesses across the UK – leaving them vulnerable to liability claims, hefty fines and prosecution, according to new research by LV= Broker.

By law, all businesses employing staff must have employers’ liability (EL) insurance as a minimum otherwise they can be fined up to £2,500 a day by the Health and Safety Executive. Despite this, the research found that 350,000 small businesses which employ staff have no EL cover in place.

Analysis of LV= data shows that after claims for theft and damage, public liability cases now make up the next largest proportion of claims. However, according to the research, more than 6% small businesses have no public liability insurance in place.

LV= also found 60% of small businesses do not have business interruption insurance.

LV= Broker commercial lines director Mike Crane said: “This research shows that thousands of small businesses are leaving themselves vulnerable to financial ruin by not taking out appropriate insurance cover, particularly those employing staff who are risking daily fines of £2,500.

“In addition, in today’s culture where compensation claims are rife, SMEs [small and medium-sized enterprises] need to protect themselves as they could find themselves thousands of pounds out of pocket. And as we’ve seen in recent times, with the riots, and freezing winters causing thousands of floods to commercial premises, there are many very real risks to SMEs which could prevent them from trading, and being insured for business interruption can be make or break for a small business.”

LV= interviewed 750 SMEs with a representative split across the sectors.