According to research from insurer Aviva, UK businesses are not spending money on insurance in case of business disruption.
62 per cent of businesses were found to not include business interruption insurance in their insurance package, which would provide cover for loss of income and during recovery.
However, almost a quarter (21 per cent) said they had experienced such an incident.
Of businesses without proper insurance – 42 per cent said they had to borrow money from friends in family, take out a bank loan or dip into personal savings.
“We never want to think about the worst case scenario but when it comes to protecting your business, taking a few simple measures now could make a huge difference to your recovery,” Robert Ledger, head of small business at Aviva, said. “Ask yourself if you could afford to pay costs like wages from your own pocket until the business is back to being fully operational.
“If not, you should check you have business interruption insurance included in your policy.
You should also consider creating a business continuity plan. It is quite straightforward, for a lot of small businesses it could be done in the time it takes to have coffee and a sandwich, and will play a vital role in helping you understand and manage any risk to your business operations, as well as helping assess the level of business interruption insurance you may need.”
Aviva offers three pieces of advice: plan ahead (consider an emergency plan); think outside the box (identify how things could go wrong before they do); and simulate a crisis and test your policies.