Many SMEs misunderstand their legal insurance obligations and risk breaking the law, a survey by Aviva has found.
Less than a third (29%) of the 1,500 surveyed businesses were confident that they had the right business insurance, while 12% admitted to having no cover at all.
Some businesses were unaware of their responsibilities for buying employers’ liability insurance, a legal requirement that provides cover in the event of an employee making a claim for a job-related illness or injury.
Failure to comply with this law could result in daily fines of £2,500.
The survey found:
- 11% of firms didn’t know that employers’ liability insurance is a legal necessity when employing staff
- 25% thought it was only needed when a business have 2 or more employees
- 87% didn’t know that the minimum legal requirement for employers’ liability insurance is £5 million
- 19% thought the minimum cover is less than £500,000.
Angus Eaton, managing director of commercial lines at Aviva, said:
“Clearly SMEs need a strong understanding of their legal obligations and how they can protect their business and employees to keep it trading – one claim without adequate cover could easily be enough to put severe financial pressure on an organisation or even close it down completely.”