Could a lack of interruption insurance leave SMEs at risk?
A large proportion of UK SMEs could be left financially vulnerable should something disrupt their everyday business operations, new research has revealed.
Around 62% of SMEs – equating to roughly 2.9 million firms – lack business interruption cover, according to Aviva.
The firm’s bi-annual Pulse research also showcased that one fifth of SMEs had seen disruption to their business for a number of reasons.
It took up to three months for a quarter of them to return to normal business trading, while the remainder took anything up to two years and beyond – showcasing the need for the right insurance.
Those without insurance revealed they were forced into borrowing from friends and family, taking out bank loans or using their own savings to fund their recovery.
Business interruption insurance can cover against these types of instances occurring, easing any potential financial burdens that could result from trading issues.
Any loss of income can be covered, meaning any impacts on company revenue and trade should be limited.
One such example would be in the event of a water leak – building insurance would cover the damage but would not cover if the company was unable to fulfill existing orders.
Some situations may require a different approach to business recovery however, with one of the most immediate solutions to seek relevant advice from insolvency practitioners if required.
For businesses that believe they would struggle to pay any additional costs in the event of something going wrong, insurance should be immediately considered.
Given the timeframes that a recovery can take, it is not always possible to fund the business from other means until trading can return to normal levels.
A key aspect of the process revolves around planning ahead and being aware of any potential problems that might occur.
Aspects such as fire, flooding or severe weather can be completely out of a company’s control, but can still have a severe impact on the way they go about their business.
Having plans in place to deal with such events can limit their impact and ensure that business growth is unaffected.
By Phil Smith