Small Business Insurance Policies for Tech Companies
Whether you work in an office or independently at home, we know that your time is better spent serving your clients than researching and comparing insurance coverages. Based on our experience serving more than 200,000 small businesses, we recommend that IT professionals consider:
Here are some important details about some of the most common insurance policies for technology businesses:
General Liability Insurance
General Liability Insurance can provide coverage when your business is accused of third-party bodily injuries, property damage, and advertising injuries (e.g., copyright infringement, a notable risk for website developers).
General Liability coverage may pay for the cost of defending your tech business in court, including attorney fees and settlement or judgment expenses, up to the policy limits if the claim is covered.
If you rent or own commercial office space, you may need this coverage in order to sign a lease or open your business to the public. The good news is that you may be eligible for a Business Owner's Policy (BOP) if your IT firm's risk profile is low enough and you meet certain other criteria. A BOP bundles General Liability and Property Insurance into one package, usually at a discounted rate.
Technology Errors and Omissions (Professional Liability) Insurance
The specialized nature of your work and the uncertainty of evolving tech means a client may blame you if:
- They suffer a data breach because of their outdated technology.
- They think you provided inadequate services because they don't understand what your work entails.
- Their server crashes and wipes out their data.
If these events lead to lawsuits, Errors & Omissions Insurance (i.e., Professional Liability Insurance) could protect your business. An E&O policy can help pay for legal expenses when you're accused of professional negligence, breaching a contract, or other errors.
Technology E&O may also cover claims of intellectual property infringement, specifically concerning software, systems, or processes that you use. This coverage may vary from policy to policy, so talk to your Insureon agent about how your E&O Insurance addresses your software liability.
To reduce some of your tech business's E&O risks, be sure to always use client contracts that clearly define the scope of your work. If you work in IT consulting, train your clients on how to reduce their risk of data breaches, which in turn reduces your risk of getting sued over security events.
Workers’ Compensation Insurance for IT Businesses
If you have any employees, your state likely requires you to carry Workers' Compensation Insurance.
A typical Workers' Compensation policy can provide coverage when your employees are injured at work. It may help pay for:
- Medical expenses
- Replacement wages
- Disability benefits
- Death benefits
- Legal expenses if your business is sued over the accident
Work injuries may seem improbable in an office setting, but they are not impossible. Keep walkways clear of obstructions and cords to further reduce the risk of workplace accidents.
Commercial Property Insurance
After a major disaster or burglary, the last thing you'll want to do is drain your bank account paying to replace damaged equipment and office furnishings. Commercial Property Insurance can protect your assets and cover repair and replacement costs caused by:
When you shop for tech Property Insurance, ask your Insureon agent whether to insure your gear at its current cash value or its replacement value. The former may cost less, but the latter may offer a higher payout for a covered claim.
Umbrella Insurance (i.e., Excess Liability Insurance) supplements certain liability insurance policies when their limit has been reached. For example, if you owe $1.5 million on a General Liability claim and your policy only covers $1 million, you can apply your Umbrella coverage toward the claim to pay off the remaining $500,000.
The nice thing about Umbrella Insurance is that it can offer millions in extra coverage at a reasonable price point. Rather than bumping up the limits of your applicable policies, you can purchase an Umbrella Insurance policy. However, it's important to note that Umbrella Insurance can't be applied to Errors and Omissions Insurance.