Eric Galbraith says firms need support if they are to keep up their insurance cover.

The chief executive of Biba, Eric Galbraith, has written to the government to ask for support in persuading small businesses to keep up their insurance cover as the economic crisis deepens.

Galbraith fears firms may forgo cover or risk invalidating their policies by delaying maintenance work. He is also concerned they might abandon proactive risk management policies.

The trade body wants a meeting with the government to discuss how it can work with ministers to help struggling small firms maintain adequate insurance cover.

Galbraith’s letter to Baroness Vadera, the business minister, said: “I am writing to seek your support for our ongoing work to encourage British businesses to maintain risk management and insurance protection during the credit crunch.

“Biba is concerned that deteriorating economic conditions may lead several businesses to forgo insurance cover or to take action which will reduce or invalidate their cover, such as putting off maintenance of property and vehicles.

“The action could leave businesses unprotected in the event of theft and vandalism, or a major incident such as flooding or fire.

“In our view, this would be shortsighted and could prove more costly in the long term.”

Biba is concerned uninsured cash-strapped businesses could be saddled with heavy losses if they suffer problems such as fire or theft.

In a statement aimed at small firms, Galbraith said: “In challenging market conditions and with the threat of recession, Biba understands the pressure on all businesses to make cost savings.

“However, it is vital that all businesses take the appropriate steps to ensure they are protected and not breaking any condition or warranty on their insurance policy which could leave them exposed.

“Cost cutting could ultimately be a false economy and businesses should work closely with their brokers.”