In addition to all the parties and funny hats, New Year’s is a time for resolutions and introspection – even in the IT insurance world. It's a good time to think about your risk management and ask yourself whether that IT insurance policy you've had for years is still up to the task of protecting your business.
6 Things to Check When You Renew Your IT Insurance Policy
How do you know if it's time to upgrade your policy? Conduct an end-of-year review of your risk management. We suggest checking these six things as part of your year-end insurance review:
- Staff numbers. The number of people you employ may vary based on your projects. Because of this, your Workers' Compensation Insurance premium may change from year to year. Let your agent know about staff changes to ensure you're meeting state Workers' Comp requirements (and not paying too much for unnecessary coverage).
- Career shifts. If you've changed specialties, let your IT insurance agent know. Errors & Omissions Insurance is partly priced based on the area of tech that you work in. Say you jumped into cybersecurity – your insurance agent needs to know so they can adjust your tech liability insurance to fit your needs.
- Revenue projections. Revenue numbers can fluctuate. Some of TechInsurance's clients do contracting work part-time in addition to their regular employment. Others might decide to start working full time as a consultant. If you expect your revenue to grow or change for other reasons, make sure your insurance is based on your revenue projections for the coming year.
- Office leases. If you rent an office space, there's a good chance you need to have General Liability Insurance to meet your landlord's requirements. If you plan on moving this year, new leases may require higher coverage limits or specific liability coverage bundled with your GL.
- Client contracts. A new client's big contract can mean more money, but it may also require additional liability coverage. For this reason, it's helpful to work with a broker who can get new insurance quotes when you need them and upgrade your coverage to fit the demands of a new contract.
- Subcontractors. Even if you run a one-person business, you'll want to be prepared in case you hire subcontractors in the coming year. Once you do, you can typically add them as "additional insureds" to your Errors and Omissions or General Liability. See "What You Need to Know About Subcontractor Insurance Coverage" for more on covering 1099 contractors.
What Happens if My Business Is Underinsured?
To avoid being underinsured, you should provide your IT insurance agent with the most accurate information about your business, its staff, and projected revenue. Why is this essential?
- Insurance audits. Say your business underestimates its revenue and ends up making more than projected. After an end-of-the-year insurance audit, your insurer points out that you underpaid and owe extra premium – which you'll have to pay all at once. Adding an extra insurance bill that's suddenly due at the end of the year can hurt. (Although it’s usually better to underpay than overpay – if your revenue projections are too optimistic, you can’t recover extra premiums at year’s end.)
- Underinsurance penalties. While liability insurance doesn't come with underinsurance penalties, underreporting your payroll can trigger Workers' Comp fines. For instance, New York Workers' Comp laws penalize employers $2,000 a day if they fail to get the proper insurance after a 10-day warning. On top of that, they can levy other penalties for noncompliance.
Your Insurance Should Change as Your Tech Business Does
As your business grows and changes, your technology liability coverage should follow suit. Part of your planning ahead should include ensuring you're getting a good price on your coverage.
When you do your year-end insurance review, browse TechInsurance's sample quotes to get an idea of what other IT professionals pay for coverage. Use our online application to get free insurance quotes tailored to your business. Now is the perfect time to find out if you can save money on your coverage.