Almost a third (29%) of small enterprises are putting their business, employees and customers at unnecessary risk by operating without any business insurance, according to research commissioned by my company Insurantz.com, part of the Jardine Lloyd Thompson Group.
This means that up to 156,000 of Britain's 4.45m small businesses owners* could be risking their homes by operating without insurance when having personal guarantees against their business.
Our nationwide survey of businesses employing up to 50 people, carried out by OnePoll, uncovered a worrying attitude towards insurance. Twelve percent of respondents were unsure whether they were insured and 30% admitted to having little or no idea what their policy covers.
Britain's booming ‘Dragons' Den' culture has led to record rises in new enterprises, and the current credit crunch will lead to more people starting their own business when industry starts to shed jobs. However, the casual approach to insurance is highest amongst start-ups, where almost a third (32%) have no insurance with a further 14% admitting they ‘don't know' whether they're covered or not.
George Derbyshire, chief executive, National Federation of Enterprise Agencies (NFEA) told us that he was shocked by the results of our survey. "Running a business is all about risk-taking, but we would always advocate a managed and informed approach to risk," he said. "Sensible entrepreneurs discuss the issues with their advisers in the knowledge that getting this wrong can be disastrous in human, financial and legal terms."
I also think that an even more important concern highlighted by this research is the revelation that 30% of small businesses could face legal action by being unaware that temporary workers and sub-contractors must be covered under statutory employers' liability insurance, risking heavy fines of up to £2,500 a day by failing to provide cover. Last year there were over 105,000 employer's liability personal injury claims.**
The failure to adequately insure your business can be linked to the restrictive red tape which causes small businesses to spend hours each week filling in forms. A third of respondents to our survey (33%) said that arranging business insurance is too time-consuming and overly complicated which has pushed it very low in some people's priorities.
I believe that the internet will revolutionised business management for UK small businesses, which employ around 12m people and drive our economy. At Insurantz.com, for example, we have delivered what we believe is the first tailored business insurance available online in minutes, making insuring a quick and simple process rather than a tedious form-filling challenge.
This revolutionary approach to business insurance means you can now select the important cover you need to suit your business and do everything within an expected time span of 5-10 minutes from the comfort of your office or home.
It doesn't makes sense to risk your business by not being insured and whether you are a start-up or existing business, the type of service you can now get from the likes of Insurantz.com will, we believe, become the norm over the next few years, making it easy and affordable to cover your risks.
* 3.5% of those researched had personal guarantees yet no insurance
** Datamonitor: UK Employer's Liability Insurance 2008
James Pickering is managing director at Insurantz.com
