A study by HSB UK and Ireland has highlighted the significant risk small- and medium-sized enterprises in Britain face from equipment breakdowns.
Involving 500 SMEs from various UK industries, the poll revealed a troubling lack of preparedness for sudden equipment failures. Nearly two-thirds (62%) of respondents acknowledged that their business wouldn’t last more than three months if a critical piece of equipment failed.
Additionally, fewer than half (48%) believe they could handle the financial impact of essential equipment breakdowns, with 60% indicating they can allocate only about a third of their monthly revenue for unforeseen expenses.
It was also found that over a quarter (26%) of SMEs think they wouldn’t survive more than a month if key equipment malfunctioned.
Given what’s at stake, HSB considers equipment breakdowns as a catastrophic event that could threaten small firms’ business continuity, shining a light on the ‘true cost’ of such failures.
Meanwhile, despite the high costs and operational disruptions caused by equipment breakdowns, survey respondents have mixed views on insurance. Only 19% would rely on insurance to cover the replacement of essential equipment in case of a breakdown, while 12% would consider financing or leasing options.
Regarding the perceived importance of insurance, 15% of those polled rated equipment breakdown insurance as ‘extremely important’, 29% considered it ‘very important’, and 11% dismissed it as ‘not important at all’.
Alan Cain (pictured), breakdown and energy product leader at HSB, stated: “As the value of high-tech, complex equipment continues to rise, so too does the cost to fix or replace it. It’s therefore concerning to see that some businesses may not survive a critical equipment breakdown which underlines the importance of proactive risk management strategies.
“Insurance brokers can play an important role in helping their customers stay up-to-date on equipment risks, passing on critical information to ensure they are adequately protected.”
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