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Study reveals scale of SME underinsurance
Almost one in five SME owners believe their insurance would be unable to cover their income for a week after a catastrophic event, industry super fund REST says.
About 23% say their cover would be exhausted within a month and 50% within six months, according to a white paper called Bridge the Gap.
Sole traders appear more vulnerable, with 58% saying they have insufficient insurance to last a week.
“While the research shows SMEs are indeed exposed to the risk of lengthy, unplanned absences on the part of their owner, this risk is not being covered by appropriate insurance,” the paper says.
“Is this complacency on the part of SME owners simply a lack of awareness of the risks, or is the perceived cost of cover prohibitive?
“Either way, there is a case for Australia’s small business owners to be made aware of the need for this insurance and the options for obtaining it.”
Catastrophic events include sudden death, injury or impairment that could result in a business’ severe damage or collapse.
The findings are based on an online quantitative survey of 1700 respondents in May and June, including 184 entrepreneurs, 282 SME owners and managers and 64 sole traders.