As the number of SMEs continues to rise, statistics from AXA Business Insurance suggest that the majority of the 4.9 million SMEs in the UK are, probably unknowingly, operating without the insurance cover they need and over half a million are potentially breaking the law in the process.
Over half (53%) of those requiring Employers’ Liability cover by law have failed to buy it
43% of those meeting with the public/clients/suppliers neglect to protect themselves against any accidents/damage they may be responsible for
52% of those paid by clients for business advice fail to buy professional indemnity cover
Four in ten don’t buy the insurance they need for using their car or van for their business
The majority of SMEs do not have enough savings to tide them over for more than a couple of months without working. Yet over three quarters of these have no protection for personal accident
The research, carried out by AXA among the UK’s SMEs shows a worrying lack of protection among what is a fast growing and important part of the UK economy.
Employers’ liability is required by law for all businesses who employ staff whether they are part time, full time, permanent or contract1. AXA asked all those with relevant employees if they had cover in place and over half were found to be lacking. Furthermore, of those that did have the cover in place, nearly a quarter (23%) failed to display a certificate – an offence that can be punishable with a £1,000 fine.
Motor insurance is also a legal requirement. Many business owners use their own vehicle for their business but only 59% of those have bought either a specific commercial policy or added the required business cover to their regular motor insurance policy. This is required even if the vehicle is only used occasionally in relation to the business.
Other statistics from the study showed:
Only 26% of those who run their business from home have spoken to their home insurer about cover for their business
Just 22% have arranged any cover for taking their business equipment (laptop/phone etc) away from their home yet over two thirds have a laptop and a mobile/smart phone
And only 19% of those who keep their business tools at home have arranged cover for them
The AXA research looked at SMEs who had some level of insurance cover to establish where the gaps in that cover might be. There is also evidence that many businesses, particularly those set up from home, have no insurance at all – in a recent report looking at home based businesses, 56% had not notified an insurer that they were running a business from home3.
1 There are a few exceptions to this, e.g. direct family members working in a non Limited company, but the vast majority require employer's liability insurance
2 Figures based on average premium for public liability, employers liability and professional indemnity sold online or over the telephone by AXA Business Insurance.
3 AXA Business Insurance and Enterprise Nation Home Insight Report among nearly 800 home-based business in March 2014.
Some key insurances for businesses:
Employers’ liability insurance
If a business employs anyone (with a few exceptions1) even if they are part-time, a contractor, sub-contractor or apprentice then employers’ liability insurance is a legal requirement. Trading without it can attract fines of up to £2,500 per day. It provides cover in case you face a claim for compensation if a member of staff suffers injury or illness as a result of working for you.
Public liability insurance
This can pay out if a claim for damages is made against a business by a third party, eg a member of the public or a customer, for which the business is found legally liable. Many insurers will provide a legal helpline and they may pay daily compensation for required court attendance.
Product liability insurance
Provides businesses with cover should someone be injured or property damaged by a product they provide if the business is found legally liable for the loss.
Professional indemnity insurance
This can protect a business against claims made by a client for ‘mistakes’ made such as providing bad advice that ends up costing the client money.
Motor insurance
Insurance is a legal requirement if driving any vehicle. Even if only used occasionally for driving to and from work, customers need to check with their insurer and extend the policy to include business use if required. A courtesy car/van can be extremely important if your vehicle is integral to your business.
Personal accident insurance
This can be particularly relevant to those working in construction or trades where accidents happen that leave you unable to work for a while. This may pay out a lump sum or a weekly benefit, up to a maximum limit.
Cover for tools and plant
This will cover a business for theft or damage to tools and plant required for the business.
Cover for business equipment
Will provide cover for laptops, mobiles, tablets and other office equipment.
Cover for property
Insurance covering Fire and Special Perils (such as storm, flood, riot, theft) will be required for business premises, stock, machinery, plant and office contents. But also if a business runs from a home address, additional cover to regular home insurance may be required
Cover for the site
Contract works insurance will cover the site while a business is working on it, so if the works are damaged by a fire or storm for example or materials are stolen or damaged, you will be indemnified for the loss.
Cover for goods in transit
This will provide cover for products or other items sent to customers. If you are using a specialist carrier, they may have a certain amount of insurance in place already but always check this, particularly for valuable items. This cover can also protect your own goods carried in your vehicle.
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AXA Insurance UK plc registered in England and Wales under registered number 078950 and authorised by the Prudential Regulation Authority and regulated by the Prudential Regulation Authority and the Financial Conduct Authority under Financial Conduct Authority registration number 202312. Registered office is 20 Gracechurch Street, London, EC3V 0BG.
AXA UK is part of the AXA Group, a worldwide leader in insurance and asset management, with 147,000 employees serving 94 million clients in 50 countries. In 2023, IFRS revenues amounted to Euro 102.7 billion and underlying earnings to Euro 7.6 billion. AXA had Euro 844 billion in assets under management as of December 31, 2023.
In the UK & Ireland, AXA operates through a number of business units including: AXA Insurance, AXA Health and AXA Ireland. AXA UK & Ireland employs around 10,000 staff.
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