Premierline Direct claims that 30 per cent of those questioned for the survey do not have any kind of business insurance, despite the fact more than half of them are concerned about compensation culture.

In addition, many more of the firms covered in the study are underinsured.

For example, only 34 per cent have employer’s liability cover, despite the fact this is compulsory if the company has any employees and fewer than one in six are covered for business interruption – for example if a flood were to temporarily stop a firm trading.

Malcolm Tarling from the Association of British Insurers comments: ‘Most small businesses can’t afford to take risks and business insurance is one area a company shouldn’t be operating without.’

According to the British Insurance Brokers’ Association, firms should focus on satisfying legal requirements and protecting their assets.

See also: Dealing with business insurance claims