Zurich survey reveals nearly 50% uncovered or unsure
Nearly half of small businesses do not have cover for business interruption (BI) or are unsure whether they have any, a survey by Zurich UK Commercial found.
According to the survey of 1,000 SMEs, 22% of firms had no cover for losses relating to business interruption, with a further 20% uncertain as to whether they have cover or not.
Nearly a third of those asked said they were unsure whether the cover they had was adequate.
"It's very worrying how many businesses do not know if they have business interruption cover or not and what it protects against," said Zurich's commercial sales and marketing director David Smith.
"We are urging brokers to explain the risks businesses could be facing if they do not have the right insurance in place."
The survey also revealed that nearly half (44%) of SMEs claim to have suffered from some form of business interruption during the past year. Of those, over a third (35%) said they had lost money as a result, four in ten claimed to have suffered stress, and 16% said they had lost out to their competitors.
The survey also revealed that 72% of companies that had suffered business interruption were located in an urban area. The East Midlands, London and the South West were the top three BI hotspots.
Despite the large loss experience, over half of SMEs said they had no disaster recovery plan in place, while 75% thought their material damage cover would also compensate them for business interruption.
Smith said: "We believe this research provides brokers with ammunition to explain to businesses why they would benefit from having business interruption cover."
How much BI cost businesses in 2004
Region Average cost in £
East Midlands 1,187.50
South West 854.17
N West and Northern Ireland 828.57
North East 812.12
South East 535.42
East Anglia 522.22
West Midlands 444.00