Don't interrupt - SMEs leave themselves open to potential business losses

Article date: 22 October 2014

  • Around two thirds (62%) of UK SMEs – equating to around 2,900,000 businesses* - may be leaving themselves financially vulnerable without business interruption cover.

New figures from Aviva, the UK’s largest SME insurer, show UK businesses may be burying their heads in the sand and leaving themselves financially vulnerable should they suffer an incident that interrupts their normal business operations.

Aviva’s bi-annual Pulse research** reveals that around two thirds (62%) of UK SMEs do not have business interruption insurance or are not sure it is included in their current business insurance policy.

Despite this, one in five SMEs surveyed by Aviva (21%) said they had experienced disruption to their business - it took up to three months for a quarter of them to get back to normal business trading and for the remainder anything up to and beyond two years.

Those SMEs who didn’t have full insurance - two in five (42%) – admitted they had to borrow money from friends and family, take out bank loans or use their own savings to fund their recovery after an event that impacted normal trading.

Business interruption insurance can be added to the overall business insurance policy, providing cover for loss of income and helping businesses get back on their feet financially. Whilst buildings insurance would look after the resulting damage of say, a major water leak the impact of such an event might leave the business unable to complete its schedule of orders and this is where business interruption steps in to cover loss in revenue.

Robert Ledger, head of small business at Aviva, said: “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. 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 straight forward - 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.

“In addition, more and more businesses now want to see the business continuity plans of their suppliers to understand the impact of any event on their own service levels so having a business continuity plan can also be useful in your contract negotiations.”

Aviva wants to help businesses understand what business interruption insurance is and how it can support recovery should a business suffer an event which impacts their ability to trade normally – events such as fire, flood or severe weather. Aviva has produced a short film to explain what to consider and a template document to help compile a recovery plan, which has been designed for businesses with up to 20 employees, to help SMEs plan ahead and manage a crisis more easily. Visit Aviva business interruption advice for more information.

Aviva has highlighted the key factors to consider, as follows:

The A, B, C of protecting your business against interruption:

A – Think ahead

  • Make a list of what your business delivers to customers on a day-to-day basis: think about products, services, accessibility or advice.
  • Use these details to establish the lowest level that your business can operate at, and the maximum downtime you could afford: this will give you a good grasp of what you will need to deliver for business survival and something to work towards if the worst should happen and will help you see what level of business interruption insurance may be needed.
  • Check the plan regularly to ensure it is up to date and meets your business needs. Consider what you can do to continue your business whilst repairs are taking place – can you subcontract some of your orders, for example?

B – Think outside the box

  • Identify the main issues and situations which could threaten your business: consider the obvious such as fire and flood but also think outside the box to capture things like the impact of bad weather, cyber threats or data loss.  For example if you are reliant on IT remember to keep your anti-virus software up to date and implement regular back up regimes to protect the data.

C – Simulate a crisis and check your policy

Simulating a crisis is a good way to test and improve the measures that you have in place.

  • Make sure you and anyone who is involved directly in running your business are well versed on the Business Continuity Plan you have in place.
  • In the event of a crisis the priority will be to ensure staff and visitor safety – after that you’ll need to have all the necessary contact lists to hand and up to date to help you communicate with your suppliers and customers.
  • Ask some ‘What if?’ questions to help you to gauge whether you have the right steps in place: you can do this from your desk and invite colleagues to input too.
  • Double check your insurance policy to be clear of what would and would not be covered in the event of an emergency. 

The survey found that tradesmen were most likely (37%) to have to use personal savings or borrow money from friends and family to cover costs, followed by retailers and restaurateurs (30% and 29% respectively).

For more information visit


If you are a journalist and would like further information, please contact:

Sally Richards : Aviva Press Office :01603 684225 : 07789 270677:

Zoe Blackburn: Hill+Knowlton Strategies : 0207 4133013

Notes to editors:

* Calculation based on Aviva’s survey results on the number of businesses who didn’t have or weren’t sure they had business interruption insurance against the number of SMEs (4.9million) as per Government statistics :

** Aviva commissioned research with Redshift among 1,500 SME business owners and decision makers GB adults online in June 2014.

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