Technology is an amazing industry to be in these days. Things are always growing and changing, and there is always a need. From information systems to hardware installation to software developers there is an abundance of available options in the tech space. Technology businesses are a very unique type of industry with its own set of risks when it comes to liability and insurance. Besides the standard Commercial insurance policies that all businesses need, some specific technology type policies were developed for this specific niche. If you own a tech company or are considering starting one, good for you! However, you must understand the need for insurance, especially in the tech space. Plus, you may be wondering if you need to offer your employees insurance.
As a business owner, you probably understand the need for insurance. Every business regardless of the industry has risks that they face and the technology business is certainly no exception. In fact, because of the type of work you do and the online nature of your business you are likely to have a higher risk of claims than other businesses. Here are some examples of the type of insurance you might need and why.
General Liability – The basis for most business insurance is General Liability. This is going to cover third party claims of property damage and bodily injury. For example, if you spill coffee on a client’s computer that you are working on. Or a customer is visiting you are your office and trips over a cord and fractures their wrist. In both of these scenarios, you are responsible for the damages. This doesn’t even have anything to do with being a tech business, but it is a risk you face.
Commercial Property – Certainly you will have business personal property at a minimum, like computers and desks and chairs. Additionally, if you own the building in which your business operates you will want to insure that under Commercial Property insurance. This way if there is a fire, lightning, theft, wind, etc. you can have the building and business personal property replaced. Even better, you can put an essential coverage on this policy known as Business Income, or Business Interruption, which will provide you with your lost income due to a covered loss. For example, if you have a fire in your building and are unable to remain open for your customers, the Business Income coverage will allow you to continue to pay your normal operating expenses so you can get back to business quickly. It also allows you to keep key employees if you have them.
Errors & Omissions – One of the most essential insurance policies you will need a tech company is Errors & Omissions, or Professional Liability. Because you are in the business of providing a professional service you need Professional Liability. It will cover you for mistakes that you might make or omissions you do during the course of your business. Of course, you are very careful when it comes to your passion, but sometimes these things are inevitable. A small thing like a typo can cause serious issues for a client and if it ends up causing them financial hardship, they are likely to sue you. Not to mention the fact that some clients are just never happy and could claim that you were negligent. A great coverage part within Professional Liability insurance is defense costs. Have you priced a lawyer lately or looked at court costs? If you are sued, you are likely to incur tons of defense fees and your Professional Liability policy will reimburse you for them. Sometimes this coverage is unlimited and sometimes it is included in your limit of liability so be sure to read your policy to be sure.
Cyber Liability – You work a lot in the online space, right? Perhaps you store your customer’s information on a computer. Do you take payments online? All of these are probably true, especially with you running a technology business. Cyber Liability insurance is a must for most businesses these days. With the number of data breaches that happen daily, as well as the growing number of hackers it is a vital coverage to have if you want to keep your business profitable. One Cyber Liability claim can put any business under, but having the right insurance in place can prevent this from happening very easily. It even usually includes public relations coverage if there is a data breach, and most policies now also include ransomware coverage. If a hacker steals your data and demands a ransom, the insurance company will pay for it so that you can quickly retrieve your data back from the criminals.
As a growing business, you probably have, or will soon have, employees. Whether you have one or 50 there are some additional insurance policies that you will need to consider when putting together your insurance package. Not only do you need to consider the policies for your employees to be happy about their benefits package, but also because it is sometimes a legal requirement. You must check with the state that you live in to see what insurance may be required. Most states will require you to have Workers Compensation insurance the minute you hire an employee, while some may say you need 4 or more. You must know the employment law where you are doing business.
As you can see, having employees does mean that you will be paying more for insurance as you need some extra insurance policies to cover them and your business. A sole proprietor will not need the policies mentioned like Workers Compensation and Employment Practices, or Benefits Liability. The exposure is less, therefore your insurance needs are too.
On the other hand, a tech company that does have employees should have most, if not all, of these insurance policies. You will need to get quotes for them all and determine what limits you need and how much you can afford. Keep in mind that even though it may feel like just another bill to pay, insurance is an investment and can truly save your business. Your goal is to be profitable and one small mistake or unforeseen event can flip your world upside down, so make sure you are protected with the best insurance portfolio.