It's no secret that San Jose is at the heart and soul of the tech world and technology innovation. In fact, it produces more patents than any other city in the country. As the major city in the Silicon Valley area, San Jose is flush with talented
engineers and imaginative entrepreneurs.
But even the most talented and imaginative small-business owners still need to protect their tech ventures with adequate small business insurance. Read on to learn more.
Small Business Insurance: Protecting the Capital of Silicon Valley
IT insurance can protect small businesses and startups from many common sources of bankruptcy. The financial stress of lawsuits, workplace injuries, property damage, and data breaches cause many businesses to close their doors for good. These expenses
are unpredictable and can easily end up costing over $100,000.
The answer for many San Jose, Sunnyvale, and Santa Clara small businesses is to invest in small business insurance. Some of these policies are required by law or contracts – others just make a lot of sense. Here are the basic coverages an IT company
General Liability Insurance is often required by law or lease agreements. It covers third- party lawsuits (lawsuits filed against you by people not employed by your business) over damaged property, physical injuries, copyright infringement, slander, and
libel. If a web
developer in Sunnyvale is sued for using a copyrighted design, this coverage protects them. Likewise, if a telecommunications installation company in Mountain View is sued when they damage a client's building, GL Insurance can cover the
cost of the claim.
Many IT professionals purchase a Business Owner's Policy (or BOP) because it offers lower rates. Because this policy is only available to small businesses with relatively low risk profiles, insurers can lower their premiums. A BOP is actually two
policies bundled together: General Liability (see above) and Property Insurance. Commercial Property coverage insures any equipment, buildings, office space, computers, furniture, and supplies your business owns. If this commercial property is damaged
or destroyed by a covered event, the insurance company will reimburse you for the loss. Most Property Insurance companies offer coverage for fires, theft, vandalism, and some weather events.
Errors and Omissions Insurance (also called Professional Liability Insurance) pays for many tech-related lawsuits and disputes about your professional work. What does E&O Insurance cover? Software flaws, shoddy work, late deliveries, poor performance,
bad recommendations, consulting errors, third-party data breaches (ones that happen on client computers), and other professional liabilities. The data breach coverage in E&O Insurance is crucial for tech businesses. If your software (whether you
build, recommend, or just install it) causes a client to suffer a data breach on their computers, this coverage pays for the cost of your lawsuit.
California requires IT companies to purchase Workers' Compensation Insurance (also called “Workers' Comp” or “Workman's Comp”). This coverage pays for an employee's medical expenses and lost income if they
suffer a work injury (e.g., carpal tunnel syndrome or a fall down the stairs) or develop an occupational illness (e.g., exposure to chemicals or environmental toxins). Additionally, Workers' Comp policies often contain Employer's Liability
Insurance, which pays the lawsuit in the event that an employee decides to sue in lieu of benefits. If you run a one-man operation or a sole-proprietorship, CA law doesn't require you to purchase this coverage. But businesses with employees will
generally need this policy.
E&O Insurance covers data breaches on your client's network, while Cyber Liability Insurance covers breaches that happen on your network. For this reason, Cyber Liability Insurance (also called “Cyber Risk Insurance”
or “Data Breach Insurance”) isn't necessary for most IT companies. Most IT companies simply don't store much private data on their devices. However, business intelligence companies, web hosting companies,
and some other IT firms might need this policy. Cyber Risk Insurance pays for forensic investigations, extra personnel, the cost of contacting affected customers, and credit monitoring services for those affected by the breach. These resources help
you fulfill your legal obligations (CA has some of the strictest data breach laws) and prevent identity theft. If you have any questions about which coverages you need or don't need, our IT insurance specialists will help you sort through the
For more details about any of these policies (or for a free quote), call one of our insurance experts at 1-800-668-7020. Or submit an online insurance application and we'll email you a free quote, usually within minutes.