Research by DVL Smith's Evolution shows that 42% of UK SMEs are conscious that they do not have sufficient insurance cover in place and 70% felt that it would be beneficial to get at least one additional insurance policy.
It was highlighted that confusion over the types of insurance cover required, the products offered, price and lack of time were the main reasons that businesses are prevented from purchasing the additional protection.
In 2009, the UK insurance industry paid out a total of £6.4 million in liability claims. These consisted of accidents at work, injuries to the public on commercial premises and professional error, according to figures published by the Association of British Insurers (ABI).
One single claim could be severely damaging for any business. It can be extremely costly and stressful for businesses with some claims resulting in insolvency, thus highlighting the importance of having the correct level of insurance cover in place.
Insurance is often considered a nuisance due to its cost and complexity. Some aspects of liability insurance are legally required and others are voluntary, nevertheless all policies can provide valuable assistance at crucial times.
With such a precious and powerful asset, having the right policy in place to protect your business against any kind of eventuality can only be beneficial.
Liability insurance is protection aimed at safeguarding businesses against serious incidents from members of the public or employees that could result in a significant claim.
Public liability insurance is a voluntary purchase. It will protect businesses from claims made against them by members of the public who have been injured, made ill or suffered damage to their property.
A minimum of £5 million employers' liability insurance (EL) is legally required if a business employs any number of staff, however most insurers provide £10 million as standard. The research by DVL Smith's Evolution found that an alarming 18% of SMEs do not believe they have employers' liability cover.
According to data from the Office for National Statistics, there are approximately 1.4m SMEs in the UK with at least 1 employee. If any of these 1.4million SMEs fail to purchase employers liability insurance they could be susceptible to penalties of up to £2,500 for every day that it traded without it, or even face a maximum of 14 years imprisonment.
Obtaining public liability insurance quotes can be daunting and complex and many will postpone the process for as long as possible. A lack of understanding was the main reason businesses are not purchasing the correct insurance.
A policy that covers all potential risks would be most beneficial. Ideally, businesses should get a combined policy that includes different types of cover for every aspect of their business operations. This tends to be more straightforward and is normally cheaper. For example, public liability, employers' liability, product liability, professional indemnity, business interruptions, could all be covered within 1 policy if required.
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