Business Insurance Gaps UK SMEs Discover During Health Checks

In many cases, a 12-month indemnity period is not long enough for a business to fully recover after a major loss. While it may reduce premiums, real-world recovery often takes significantly longer due to planning approvals, contractor availability, supply chain delays, and the time required to rebuild customer confidence. Even once premises reopen, revenue may take months to return to pre-loss levels, particularly if clients have moved to competitors during the disruption.

During business insurance health checks, we regularly find indemnity periods that reflect budget decisions rather than realistic recovery timelines.

Where short indemnity periods create risk:

• Rebuild or refurbishment delays exceeding 12 months
• Extended time to win back customers and contracts
• Regulatory approvals slowing reopening

Yes — an incorrect or outdated business description is a common cause of claim disputes. Insurers assess risk based on declared activities, and if a claim arises from work that falls outside that description, cover may be restricted or declined. As businesses evolve, descriptions arranged at inception often fail to reflect current operations.

We frequently find policies describing businesses in overly broad or outdated terms, creating ambiguity at claim stage.

Examples of discrepancies:

• Consultancy firms that also install or maintain equipment
• Retailers offering repair or modification services
• Manufacturers providing design or advisory services

Yes — failing to notify insurers about new services is a common gap identified during health checks. As SMEs diversify to remain competitive, they often introduce new revenue streams that carry different risk exposures. If these changes are not disclosed, insurers may treat related claims as uninsured activities.

Many businesses assume their existing policy automatically adapts to growth, but insurance reflects declared risk — not future intentions.

Common undeclared changes include:

• Launching e-commerce or online sales
• Adding installation or maintenance services
• Entering higher-risk sectors or larger contracts

Are Public Liability limits high enough to meet UK contract requirements?

Public Liability limits are often insufficient for modern contract requirements. While £1–2 million may have been adequate at start-up, many commercial clients now require £5 million or £10 million in cover as a condition of doing business. Failing to meet these requirements can result in lost contracts or uninsured exposure if a large claim arises.

During health checks, we frequently see liability limits that have not been reviewed since the business was established.

Typical gaps include:

• Contractual insurance requirements not reviewed
• Limits unchanged despite business growth
• New client sectors with higher risk exposure

Why should SME directors consider Directors & Officers insurance protection?

Directors & Officers (D&O) insurance protects business leaders from personal liability arising from decisions made in their managerial role. Many SME directors assume company insurance protects them personally, but this is rarely the case. Claims relating to employment disputes, regulatory investigations, or allegations of mismanagement can be brought directly against individuals.

Without D&O cover, directors’ personal assets — including savings and property — may be at risk.

Common exposures include:

• Employment tribunal claims
• Regulatory or compliance investigations
• Allegations of wrongful decisions or governance failures

Are tools, laptops, and equipment covered when used off-site or in transit?

Standard business policies often limit cover to the insured premises, leaving gaps when equipment is used elsewhere. With remote working, mobile operations, and client-site work now common, many businesses unknowingly expose valuable tools and technology to uninsured risks.

We frequently identify policies that do not extend cover beyond the primary business location.

Common exposures include:

• Theft from vehicles not covered
• Equipment used across multiple client sites
• Laptops taken home by employees

Can failing to update employee numbers affect Employers’ Liability insurance accuracy?

Yes — failing to update employee numbers and wage roll can affect Employers’ Liability cover. While the insurance itself remains valid, inaccurate declarations can lead to premium adjustments, compliance concerns, and potential scrutiny following a claim.

As businesses grow, staffing changes often outpace policy updates, creating discrepancies between declared and actual exposure.

Issues identified during reviews:

• Rapid hiring not reflected in wage roll estimates
• Contractors or temporary staff not disclosed
• Incorrect employee role classifications

Why do insurance gaps emerge as SMEs grow and evolve?

Insurance gaps rarely appear suddenly. They develop gradually as businesses grow, diversify, and adapt to market pressures. New services, increased turnover, digital transformation, and evolving contractual obligations all change risk exposure — but policies often remain unchanged.

Over time, this creates a widening gap between perceived protection and actual cover.

Key growth triggers for insurance gaps:

• Expanding services or entering new markets
• Hiring staff or restructuring roles
• Adopting new technology or remote working
• Taking on larger contracts with higher liability requirements

Most SMEs we review aren’t uninsured. They’re under-protected.

Insurance should evolve with your business. A proactive review today can prevent a costly surprise tomorrow. Fill in the form below to get your Free Business Insurance health check.