Research reveals vulnerability of UK SMEs to equipment breakdowns

• Two-thirds of SMEs would not survive for longer than three months if a critical equipment breakdown halted their ability to trade
• Less than half of businesses could absorb the costs of essential equipment if it was to breakdown

Research conducted by HSB (UK and Ireland) suggests that UK small and medium-sized enterprises (SMEs) are vulnerable to catastrophic events like equipment breakdowns, which could potentially jeopardise their business survival. 

HSB's survey, which gathered responses from 500 SMEs across multiple UK industries, reveals a concerning gap in preparedness for sudden and unforeseen equipment breakdown.

In the event of equipment failure, almost two-thirds (62%) of respondents admitted that their business would not survive longer than three months if a critical piece of equipment broke down, halting their ability to trade. Furthermore, less than half (48%) of the surveyed SMEs believe they could absorb the cost of essential equipment breakdowns, with 60% confessing they can only allocate around a third of their monthly revenue to cover unexpected expenses.

The immediate impact of equipment breakdowns is striking. Over a quarter (26%) of UK SMEs stated they wouldn't survive for more than a month if critical equipment malfunctioned, highlighting the financial fragility prevalent amongst some SMEs.

Despite equipment breakdowns leading to costly repairs and replacements, and in some cases, disruption of business operations, the survey respondents have contrasting views when it comes to insurance. 

Only 19% of respondents would rely on insurance to finance the replacement of essential equipment in the event of a breakdown, while 12% would explore finance or leasing options.

In terms of the perception of insurance importance, while 15% of respondents deemed equipment breakdown insurance 'extremely important' and 29% considered it 'very important', 11% dismissed it as 'not important at all'.

Alan Cain, Breakdown and Energy Product Leader at HSB, said: "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."