SMEs are risking going out of business through not having the right insurance, but relatively few are seeking advice from brokers, a new QBE report says.

It says more than 60% of small business owners surveyed by the insurer believe they are unlikely to have the right cover in place and nearly a quarter say their operations would likely go under if someone made a liability claim.

At the same time brokers are being overlooked as a source of advice with, 51.6% of respondents using an accountant or financial adviser, 40.2% doing their own research online and 23.8% consulting family or friends. Respondents could nominate more than one source of information.

“Almost a quarter of business owners say they ask their family and friends, and only 15% initiate the conversation with their insurance broker,” QBE Australia SME GM Aaron Gavin said.

The report, SMEs and Insurance: A Pulse Check On Risk Trends For Business, surveys more than 600 SMEs and draws on five years of QBE claims data analysis.

The report finds the industry can do more to educate small business owners about liability risks in particular.

“QBE principally sells through insurance brokers, so we’re advocates for engaging an insurance professional who can have the right conversation,” Mr Gavin says.

The most expensive liability claims for small businesses relate to injury to labour hire personnel, injury to third-party workers, electrocution, fire, and defamation and slander, the data shows.

The top 10 also includes being trapped by machinery or equipment, physical assault injury, faulty products, slips and falls, and injuries through impact by an object.

The highest claiming sectors are roofing services, plumbing, laundries and drycleaners, automotive repairs and services, and auto fuel retailing.

When asked how they would pay for a claim if an incident happened, 42% of SMEs said they would tap an insurance policy, 27% said they would dip into savings, 18% said they didn’t know and 15% said they wouldn’t be able to finance the legal costs.

Other responses including taking out a personal or company loan, borrowing from family members or using a credit card.

Mr Gavin says underinsurance and the lack of business continuity cover are also key issues.

“We’ve seen plenty of examples out there where we were able to reinstate the property and legal liability was covered, but because the business couldn’t continue trading and cashflow was impacted, it lost customers and ultimately went out of business.”