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Surprise! 8 Things You Didn’t Know about Your Small Business Insurance

Surprise! 8 Things You Didn’t Know about Your Small Business Insurance

Do you know how your business insurance protects your business? Check out this list of eight surprising ways small business insurance protects business owners.

Monday, January 6, 2014/Categories: cyber-security

Let's face it: small business insurance can be confusing. There's no shame in admitting that between learning the ins and outs of Property, General Liability, and Professional Liability Insurance, a small-business owner can be confused about what exactly is covered.

But don't sweat it. We know the finer points of insurance can get lost in the shuffle and we've created this guide to help you make sense of the coverage that keeps your business financially secure. Here are eight important things you might not know about your small business insurance…

  1. Policies should be tailored to your profession. Insurance policies are not one-size-fits-all. Working in IT, you'll need information technology insurance. An Errors and Omissions Insurance policy should be customized to fit the work you do as an IT consultant, web developer, or other technology specialist. Check out our sample insurance quotes for tech businesses of different sizes and specialties to get an idea of what insurance might look like for your business.
  2. Insurance may come with a lawyer. Many small business insurance policies provide you with access to your insurance company's lawyers. This means that, in the event of a lawsuit, you won’t have to spend time tracking down a lawyer who’s familiar with defending small IT businesses. Choosing an insurance provider that offers access to a lawyer can save a lot of time and frustration for IT professionals.
  3. You need your insurance to sign contracts. To sign an IT contract, you may have to purchase General Liability and E and O policies and show your client your Certificates of Liability Insurance, which prove you’re covered and supply a summary of the key details of your coverage.
  4. Small businesses can bundle insurance policies together to save. A Business Owner's Policy (BOP) combines General Liability Insurance and Property Insurance into one policy. These policies are only available to small businesses and generally cost less than purchasing both policies separately. Think of it as the small business insurance version of a combo meal.
  5. E and O Insurance covers frivolous lawsuits. When a client sues you unfairly or without cause, Errors & Omissions Insurance (also called Professional Liability Insurance) covers the cost of your legal defense. While it’s never pleasant to face an E & O suit, many technology professionals find it reassuring to know that, if such a suit arises, their insurance has them covered regardless of the suit’s merit.
  6. Client data breaches are covered by E&O Insurance. If a client's network is hacked, you may be liable for some of the damages. Fortunately, E&O Insurance covers your third-party data risks.
  7. Wrongful acts or crimes can be covered. Standard insurance policies like General Liability Insurance or E&O coverage do not cover wrongful acts and crimes (or other scenarios where you or an employee intentionally makes a mistake). However, you can purchase coverage for these liabilities through Fidelity Bond Coverage. If you work with banks, financial professionals, or other industries concerned with theft, you may even be required to have this coverage.
  8. Personal insurance usually doesn't cover your business liabilities or property. The personal insurance policies you have for your home and car might not cover liabilities related to your business. If you drive for your business or operate out of your home, you might need small business insurance policies to cover those liabilities. If a client visits your home office and gets injured, for example, most Homeowner's policies won't cover the lawsuit. General Liability Insurance, however, will.

For a more comprehensive explanation of small business insurance, check out our eBook on Risk Management for IT Professionals.

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