What Every IT Startup Needs to Know About Business Insurance Coverage
When you own an IT startup, you’ve got plenty of opportunities ahead of you – and plenty of risk.
Many first-time business owners are most concerned about health insurance, especially the Affordable Care Act (ACA), which mandates that employers with 50 or more fulltime workers offer health insurance to their employees. Because your business is probably very small, health insurance shouldn’t necessarily be your biggest worry. But you are exposed to a lot of liability risk – no matter the size of your business.
Business insurance is an excellent way to boost the stability of your startup. Without the right technology insurance policies in place, you could be exposing your IT business to unnecessary risk – which is not good for your long-term financial health.
Get a Checkup for Your Technology Insurance
With health insurance, the best time to make sure you have the right coverage is when you’re healthy, not when you get sick or injured. The same applies to businesses. If you wait until something bad happens before you check to see what kind of coverage you have, you could be in for a nasty shock and expensive legal fees.
Keep your business healthy by conducting an assessment now, and get the business insurance most likely to keep you safe.
General Liability Insurance
When you start an IT business, the first policy you should consider getting is General Liability Insurance to give your business a solid foundation. It can help protect you from liability claims involving third-party…
- Accidents. You have an employee who’s a whiz at code but a bit of a klutz. During a client meeting, she accidentally spills her coffee all over a client’s new MacBook Pro. It’s ruined.
- Injuries. After the meeting, your client trips and falls down the stairs, breaking his arm. It is just not his day.
- Property damage. The business next door has an electrical fire. While the fire itself leaves your office untouched, soot and smoke still damage all of your furniture.
In each of these cases, your General Liability Insurance should cover you. It can even protect you against advertising injury (e.g., slander, libel, copyright infringement, etc.). “If you were running an ad [that] said, ‘We are the ABC IT experts, unlike XYZ who are a bunch of incompetent clowns,’ that could fall under General Liability, too,” says
Michael Carroll (@InsuringLawyer),
Learn more about General Liability Insurance in our blog post Answers to Technology Businesses’ Top Five General Liability Questions.
Business Property Insurance
If your business equipment (think laptop, servers, etc.) is damaged, it can greatly impact your ability to do your job. Business Property Insurance can pay to repair or replace damaged property. So if your small IT business is impacted by theft, fire, hail, or even vandalism, it can help pay to fix the damage and get your business back up and running.
One way many IT business owners save money is by purchasing a Business Owner’s Policy, or BOP Insurance, which combines General Liability and Business Property coverage into one policy. Typically, the bundled coverage is at a lower rate than if you purchased the policies separately.
Professional Liability Insurance
Professional Liability Insurance, also known as technology Errors and Omissions Insurance, can offer protection if your client accuses you of making a mistake and sues you. It can be something as straightforward as your being late on a project, or even their annoyance that you refused to use Comic Sans on their website. Whatever the reason, if a client decides to sue, your Professional Liability Insurance can help pay for:
- Lawyer fees.
- Court costs.
- Any damages owed.
If you miss a deadline, make a typo in a line of code that causes a client’s website to crash, or somehow don’t hold up your end of a client agreement, Professional Liability Insurance can help cover lawsuit costs.
Commercial Umbrella Insurance
A Commercial Umbrella Insurance policy provides coverage above and beyond the limits of your other policies. Many IT business owners don’t think they will ever have a claim that could exceed their normal coverage limits, but it’s not that farfetched.
Say you’re a web designer. Your client, a surgeon, is over for a meeting to review the design. As he’s leaving, he trips over a power cord, falls, and breaks his wrist. Turns out your client’s work is highly specialized. He makes upwards of $700,000 a year – and now he can’t work and sues you for lost wages, on top of his medical expenses.
“If you are a company that could face a loss that is extremely high, you should have a significant amount of insurance,” says
Bob Zeglarski (@BizLawyer),
Cutwater Law, PLLC
(@CutwaterLaw). “Your insurance should scale with the potential loss that you could encounter.”
If you are ready to review the insurance needs of your IT business, give us a call and our friendly TechInsurance agents will be happy to answer your questions.