16 Aug Is Business Insurance Really Necessary for SMEs?
Currently, it’s only a legal requirement to have business insurance if you have a work vehicle or employees, so small businesses being run by one person without a vehicle may be tempted to believe that not buying business insurance is a legitimate saving.
However, in the event of burglary or fire, or a claim by a customer or member of the public, the cost of replacing goods and equipment or settling a civil litigation claim could put your ability to continue trading in jeopardy.
Small business insurance following the pandemic
A survey commissioned by Allianz Commercial has revealed that the number of sole traders and SMEs now trading without business insurance is growing.
- 47% of SME respondents did not have business insurance because they felt the business was too small
- 42% did not have business insurance because they were remote working
- 34% did not insure their business because they had no visitors coming to their premises
The survey also revealed that during the COVID-19 pandemic and lockdown periods:
- 20% of SMEs were working remotely
- 17% reduced the products or services they offered
- 15% reduced staff numbers
During this period, 48% of SMEs reduced their business insurance cover.
The survey results showed that between April 2021 and April 2022 many SMEs changed the way they operated once again:
- 19% increased the products they offered
- 16% altered the type of products sold or nature of services offered
- 16% went back into an office or premises
However, only 41% of the respondents reviewed their small business insurance to take the changes to their business into consideration. While, 52% of sole traders and SMEs made no changes at all.
Being underinsured is a huge risk
If you adjusted your business insurance to reduce the level of cover during the pandemic, then now might be the right time to review it, especially if you have returned to pre-pandemic levels of trade.
The survey found that many SMEs estimated it would take a year to recover from a catastrophic event such as a fire on site. However, it’s more likely to take around two years, and recovery will take more than just repair of premises and replacing stock and equipment.
Business recovery will also include staff rehiring and retraining and a significant amount of marketing to win customers back and reinstate good faith. If you are underinsured, these and other costs may be the difference between success and failure.
Tredstone Risks, the one-stop-shop for your tailored business insurance needs
We fully understand that the current economic climate is making it very difficult for sole traders and SMEs to keep their heads above water, especially as it has come straight after the global health pandemic. So, we believe in making sure you receive cost-effective small business insurance which includes the cover you need, without making you pay for cover that you don’t need.
Powered by City Insurance, Tredstone Risks provides package business insurance to cover public liability insurance, employers’ liability insurance, commercial property insurance, motor fleet insurance, legal expenses insurance and more.
What’s more we provide specialised business insurance for a number of trade types including: tradesmen, contractors, cleaners, teachers, tutors, beauticians, professionals, retailers, pubs, restaurants, and commercial landlords.
So talk to Tredstone Risks today, so that we can help you make sure you’re covered should the worst happen.
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