Business insurance - one third of startups have no cover

New research suggests that nearly one third of the UK's business start-ups are operating without any business insurance.

The survey of businesses employing up to 50 people, carried out by Insurantz.com, revealed that nearly half (44%) of home-workers and new media consultants are operating without insurance. A third (33%) of the same group admitted having little or no idea what their policy covers.

Interestingly, almost three quarters (71%) of start-ups said that they considered boosting their website rankings and coming up with a good company name as more important issues than taking out business insurance.

George Derbyshire from the National Federation of Enterprise Agencies (NFEA) was unimpressed by the survey findings:

“I am shocked by the results of this survey. Running a business is all about risk-taking, but we would always advocate a managed and informed approach to risk. Sensible entrepreneurs discuss the issues with their advisers in the knowledge that getting this wrong can be disastrous in human, financial and legal terms."

One key concern which emerged from the survey results was the revelation that 32% of startups could face legal action as they were 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, enough to put most start-ups out of business.

The failure to adequately insure can be linked to the restrictive red tape which causes start-ups to spend hours each week filling in forms as they struggle to get their business off the ground. A third of respondents to the 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.