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Home-grown businesses boom as one-man-bands hit 1.7m

Press release: 04/11/2013

  • There are 1.7 million 'one-man-bands' operating in the UK
  • One in twenty (5%) of these are turning over more than £150,000 each year
  • Over a tenth (11%) of these has no insurance cover in place, equivalent to 180,000 businesses across the UK

The British entrepreneurial spirit is thriving with millions of people now running businesses from their own home, according to new research by LV= Broker.

1.7 million[1] people are now running a business without staff and effectively operating as a 'one-man-band', often working out of spare rooms, garages and even garden sheds. Despite the tough economic climate, these entrepreneurs are achieving a healthy income. In the last year over a quarter (27%) generated a turnover in excess of £51,000 a year and one in twenty (5%) earned in excess of £150,000[2].

Home-based businesses

However, running your own business is not without risk and even with the best business model, things can go wrong. Those running a business from their home are particularly vulnerable as many small business owners mistakenly believe that their home insurance will cover their business too. In fact, one in ten (11%) of those surveyed admitted they had no insurance in place and of these, equivalent to over 180,000 businesses. When asked why they did not have cover, one in eight (12%) said they thought their home insurance would cover them as they worked from home.

Relying on a standard home insurance policy to cover a business is extremely risky. Most policies will not cover any cash, equipment or stock stored within a home for business purposes; and any public liability or accidental damage cover will exclude claims for commercial ventures. Anyone thinking of running a business from their home should discuss insurance with their broker to ensure they have sufficient cover in place.

Business Interruption

An unforeseen event, such as a fire or flood, can stop trading for days or even weeks while stock is replaced and repairs undertaken. Depending of the type of business, this can spell financial ruin for people that are unable to continue trading during this time[3]. For those who source and sell goods such as vintage items or collectables, it can take months to build up stock levels again. According to claims data, the average cost of 'business interruption' claims increased by 9% in 2012[4], yet the research reveals that less than half (46%) of one-man-bands have this insurance, increasing to 62% of those working in the trades and professions sector.

Public Liability

Another area giving cause for concern is public liability cover. Those offering services such as beauty treatments or massage will often treat clients in their homes and may even have a room set up especially for this. However, 'slips and trips' type liability claims are on the increase and the business owner is liable for any harm that befalls their clients while on their property. Analysis of LV= data shows that after claims for theft and damage caused by leaks, storms or accidental damage, public liability cases now make up the next largest proportion of claims[5]. However, according to the research, almost a fifth (19%) of one man operations have no public liability insurance in place[6].

This research shows that the British entrepreneurial spirit is thriving despite the economic uncertainty. Yet thousands of those running their own businesses are leaving themselves vulnerable to financial ruin by not taking out appropriate insurance cover. The insurance needs of a commercial enterprise are very different to those of an individual, even if the business is being run from a private home. Those who run a business - or are thinking of starting one - should talk to their broker about their plans and make sure they get the right cover for their business needs.

Mike Crane, LV= Broker Commercial Lines Director

LV= Broker

LV= Broker is part of the LV= group of companies, and incorporates Highway Insurance and ABC Insurance. LV= is a trademark of Liverpool Victoria Friendly Society Limited (LVFS) and a trading style of the Liverpool Victoria group of companies.

LV= employs 5,700 people and serves over five million customers with a range of financial products. We are the UK's largest friendly society and a leading financial mutual.

When we started in 1843 our goal was to give financial security to more than just a privileged few and for many decades we were most commonly associated with providing a method of saving to people of modest means. Today we follow a similar purpose, helping people to protect and provide for the things they love, although on a much larger scale and through a wide range of financial services including insurance, investment and retirement products.

We offer our services direct to consumers, as well as through IFAs and brokers, and through strategic partnerships with organisations such as ASDA, Nationwide Building Society and a range of trade unions.

Authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority. LVFS is a member of the ABI, the AFM and ILAG. Registered address: County Gates, Bournemouth BH1 2NF.

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  1. According to the 2012 ONS business data, there are 4,839,975 small businesses in the UK. Small businesses are defined as those with less than 50 employees. 35% of small businesses have no employees.35% x 4,839,975 = 1,693,991.
  2. 74% of those working for themselves disclosed their turnover for the survey.
  3. In 2012, LV= paid a claim where a pipe had burst and flooded a pub on New Year's Eve, forcing the landlord to cancel a sold out party and miss out on trading on the busiest night of the year. Fortunately the landlord had 'business interruption' cover, which meant that the settlement included payment for the projected income that was lost.
  4. Source: ABI. The cost of the average Business Interruption claim increased by 9.3% in 2012.
  5. According to LV= claims data in 2012, the top SME claims in descending order were for escape of water (leaks), theft, accidental damage, storms and public liability.
  6. Of the one person businesses surveyed, 11% had no insurance; of those that had insurance 6% have no public liability cover and an additional 2% have no idea if they have any public liability cover.