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230,000 Small businesses without insurance

Press release: 07/10/2013

  1. One in 20 small businesses has no insurance cover in place[1] , equivalent to 230,000 companies across the UK
  2. Over 350,000[2] small businesses who employ staff have no employers’ liability insurance and risk being fined £2,500 a day
  3. ‘Slips and trips’ liability claims now make up the largest proportion of claims after theft and damage caused by leaks, storms and accidental damage

New research by LV= Broker has found that one in 20 small business owners have no insurance cover in place – equivalent to 230,000 businesses across the UK - leaving them vulnerable to liability claims, hefty fines and prosecution.

Employers’ Liability

By law, all businesses employing staff must have employers’ liability (EL) insurance as a minimum otherwise they can be fined up to £2,500 a day by the Health and Safety Executive (HSE)[3] . Despite this, the research found that 350,000 small businesses who employ staff have no cover in place.

As well as being vulnerable to fines from the HSE, business owners could find themselves heavily out of pocket should one of their staff make a claim against them. According to LV= claims data, there has been an increase in the frequency[4] of employer liability claims as more employees brings claims against their employers, which, in part, can be attributed to the UK’s growing compensation culture combined with the tough economic climate.

Public Liability

Another area giving cause for concern is public liability cover. Slips and trips can result in expensive compensation claims for business owners who are liable for any harm caused to a member of the public while on their premises. 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, over one in 20 (6%) small businesses have no public liability insurance in place[6].

Business Interruption

An unforeseen event, such as a fire or flood, can stop trading for days or even weeks while repairs are undertaken and stock replaced. Depending of the type of business, this can spell financial ruin for companies that are unable to continue trading at alternative premises[7]. According to claims data, the average cost of ‘business interruption’ claims increased by 9% in 2012[8], yet the research reveals that just 60% of small businesses have this insurance. One in six (12%) office-based businesses and a similar number (10%) of residential property landlords have no cover in place; and in the hospitality sector one in twenty (5%) pub landlords are without this cover.

Mike Crane, LV= Broker Commercial Lines Director, said: “This research shows that thousands of small businesses are leaving themselves vulnerable to financial ruin by not taking out appropriate insurance cover, particularly those employing staff who are risking daily fines of £2,500.

“In addition, in today’s culture where compensation claims are on the rife, SMEs need to protect themselves as they could find themselves thousands of pounds out of pocket. And as we’ve seen in recent times, with the riots and freezing winters, causing thousands of floods to commercial premises, there are many very real risks to SMEs which could prevent them from trading and being insured for business interruption can be the make or break for a small business.”

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Notes to editors

[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. 4.7% of small businesses have no insurance. 4.7% x 4,839,975 = 227,479.

[2] 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. 7.3% of small businesses who employ staff has no EL insurance. 7.3% x 4,839,975 = 353,318 businesses.

[3] Source: HSE The Employers’ Liability (Compulsory Insurance) Act 1969 states that an employer can be fined up to £2,500 for any day which they are without suitable insurance. If they do not display the certificate of insurance or refuse to make it available to HSE inspectors when they ask, they can be fined up to £1,000. All employers must have employers’ liability insurance except the following: most public organisations including government departments and agencies, local authorities, police authorities and nationalised industries; health service bodies including National Health Service trusts, health authorities, primary care trusts and Scottish health boards; some other organisations which are financed through public funds, such as passenger transport executives and magistrates’ courts committees.

[4] Source: ABI: the volume of employer’s liability- related claims reported to the Compensation Recovery Unit increased by 4.3% in the year ending March 2013 against 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 small businesses surveyed that have insurance, 2.7% have no public liability cover and an additional 3.4% have no idea if they have any public liability cover.

[7] 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.

[8] Source: ABI. The cost of the average Business Interruption claim increased by 9.3% in 2012.

For further information please contact:

Vanessa Chance,, 0208 256 6996/ 07947 380074

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 5700 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.