Businesses across the UK are exposing themselves to serious financial risk through the absence of share protection insurance, according to Legal & General.
An ‘Every Business Matters' campaign, in concert with Unbiased.co.uk has identified a growing UK business share protection gap of £683 billion, 60% up on 2011, when it stood at over £427 billion.
According to a study 45% of UK business owners expect the remaining owners to buy their share of the business in the event of their death. Yet only 40% of businesses have taken out cover to ensure the funds are available for such a purchase.
L&G said that one million smaller businesses could find themselves exposed to serious financial and commercial risk in the event of one of their business owners dying.
While 56% of businesses across the UK say they have reviewed their Partnership Agreements in the last year, and 59% their Articles of Association, almost half have not (44% and 41% respectively).
More worrying, 35% admit they have never reviewed their Partnership Agreements since the business was started, and a further third (33%) their Articles of Association.
Clare Harrop, Head of Specialist Protection at Legal & General says: "Business Share Protection is invaluable to any business, ensuring a cash lump sum is available whenever death occurs, enabling the remaining business owner to buy the deceased's share and retain control of the business.
"Many business owners are not aware that this type of protection is available and we have made it our mission to raise awareness."
Karen Barrett, Chief Executive at unbiased.co.uk, added: "The aim of our ‘Every Business Matters' campaign is to raise awareness about the growing business protection gap, and communicate the importance of protection to business owners and the business protection market."
