Cutbacks Putting Small Business At Risk

In the past 12 months, one in 20 small businesses have been exposing their business to unnecessary financial risk by cutting back or doing away with their business insurance cover.

Figures from Lloyds TSB Insurance show that more than 92,000 businesses have cut insurance to lower costs, but now face under-insurance should the worst happen - business crime, for example, cost small businesses £4,575 on average in 2008.

The figures also revealed that small businesses are unaware of thier legal obligations to hold certain types of insurance.

Of the business owners who have cut back, nearly one third reduced or cancelled their Professional Indemnity policy. Although it isn't a legal requirement for companies to have this, it can leave small businesses exposed to potentially large legal bills if they are giving advice which may result in a customer suing them.