More than half a million employees are uninsured at work and only a third of employers understand their legal insurance obligations, according to AXA Insurance.

Research from AXA found 15% have considered cutting back on their insurance because of cost constraints, 5% have already done so and employers are nearly as likely to cut back on insurance spend (35%) than cut back on free tea and coffee for staff (39%).

But 13% of employers have less than £1,000 disposable cash, and 48% have less than £10,000 - meaning they will be vulnerable in the event of a claim by an employee, which one in nine businesses are likely to experience each year.

And according to AXA, a claim for fire can cost £36,000.

But despite the fact that employers have gaps in their understanding, 89% of employees were aware of insurance covering them for accidents at work, although over a third (36%) had never been given any information about their employer's insurance programme.

Doug Barnett, head of customer risk management at AXA said: "These statistics should be a wake-up call to all businesses and the insurance industry alike. With the economy as precariously positioned as it is at the moment, the last thing needed is more businesses needlessly going to the wall because they are not properly insured.

"We have taken the findings of this research very seriously and have produced materials that can be used by AXA to help get our message across to business owners and management that insurance is an absolutely vital component of any successful business."