Small business owners don't understand their insurance coverage

Small business owners should improve their awareness of what their insurance policies cover after a recent survey showed that many business owners do not know what their commercial policies actually cover.

The Protection Gap survey, carried out on behalf of Abbey Legal Protection (ALP), a provider of legal expenses insurance, revealed that one in four company directors did not know what their commercial insurance covered.

Richard Candy, underwriting director at Abbey Legal Protection, told BAD News: "Awareness of insurance cover and the terms and conditions associated with any policies that businesses have in place is as important for small firms as it is for larger businesses. Not having the appropriate cover could make an uninsured incident extremely costly for a business."

"Small businesses need to understand the terms and conditions which usually stipulate they need to contact the insurer as early as possible in the claims or they risk invalidating their cover. I believe around 50% of small and medium-sized businesses have some form of legal expenses insurance but whether they know they have it is another matter."

He added that the increasing complexity of employment law is an incentive for small firms to ensure they have legal expenses insurance in place. He said: "The complexity of UK employment law has increased markedly in recent years, with company directors under unprecedented pressure to ensure compliance with strict procedure in redundancy issues.  There is great potential to fall foul of the law - with massive financial consequences for companies of all sizes".

Also in BAD News this week:

• Small business owners unaware of insurance coverage
• Company incorporations on the rise
• Regulation threatens business growth, says report
• Government may scrap tobacco display ban
• Licensing overhaul to be in place by November 2011
• EU proposes harmonising data protection law
• Government to publish draft Defamation Bill
• UK inflation rate slows in June
• Welsh Government launches £7 million business growth fund
• Speculation continues on future of Food Standards Agency
• Charity trustees must be aware of legal implications, say experts
• Scottish fishing restrictions under review
• Retail staff better qualified than ever before
• Landlords struggle to cover mortgage repayments
• Food sales flat in June despite sun and World Cup
• £16 million funding boost for Welsh tourism
• Sunny weather boosts pub and restaurant sales
• Pub insolvencies down by a third from peak
• No VAT exemptions for charities
• Fruit and vegetable import rules changed
• EU proposes flexibility on GM crops
• Updated guidance for charity trustees