California is a great place to own an IT business. In our Best Places to Live for IT Entrepreneurs report, we cited Oakland, Silicon Beach, and Riverside as top cities for owners of small tech companies.
As you'll see in the report, there's good reason to be optimistic about IT business opportunities in the state. But when it comes to protecting your business, you can never be too careful. Between California's propensity for natural disaster and the risks small-business owners take on regardless of industry, it's wise to consider the following business insurance options.
Increased Insurance Risks for IT Businesses in California
On any given business day, there's a lot that can go wrong. That's why there's an insurance policy for just about every hazard identified in your IT business's risk management strategy.
For instance, you may qualify for a Business Owner's Policy, which is an affordable way to protect yourself from third-party lawsuits and property damage. You may also choose to protect your workers from common workplace injuries with Workers' Compensation Insurance. And then there's Errors & Omissions Insurance, which protects your IT business from lawsuits initiated by clients who claim the job you were contracted for wasn't completed to their satisfaction.
No matter what life throws your way, there's a policy to protect you. Read on for more information.
Errors & Omissions Insurance for IT Businesses in San Francisco, LA, and Other California Cities
Also known as Professional Liability Insurance, Errors & Omissions coverage is beneficial for IT professionals contracted to complete jobs – anything from network administration to Wi-Fi installations – for clients. Should your client feel your firm didn't meet the standards set forth in your original agreement, they may file a lawsuit against you. This goes for negligence, general errors, or inability to complete contracted work.
E&O lawsuits tend to happen when a client loses money or feels mistreated as a result of your work. If an Auto ID provider out of Los Angeles asks you to setup Wi-Fi for their company and you're unable to provide the coverage they need to make a certain sales quota, they may have a case against you. Carrying Professional Liability Insurance will ensure that your firm stays financially secure in the face of any lawsuit claiming negligence or oversight.
Business Owner's Policy (or BOP) for IT Businesses in Bakersfield, San Diego, and other California Cities
As mentioned above, the BOP is a cost-effective option for IT Service Providers looking to cut costs on monthly premiums. It combines General Liability Insurance and Property Insurance into a single package. This means that if your San Francisco-based firm takes on a situation in which a client is injured because of a negligent employee, you won't have to pay out of pocket to defend against any related third-party liability claims against you in court.
It also means that if you live in an area where brushfires are a problem, like Riverside or Berkeley, you'd be protected from having to pay for property damage to your office space caused by the flames. The same goes for theft and damage to inventory and supplies – with a Business Owner's Policy, you're covered from these property hazards and more.
Workers' Compensation Insurance for IT Businesses
California state law mandates Workers' Compensation coverage – even if you have so much as one employee. Beyond coming into compliance with state law, though, there are many benefits to carrying this policy. For instance, common workplace injuries are covered by Workers' Compensation Insurance. This includes repetitive motion, carpal tunnel, slips, trips, falls, sudden accidents, knee injuries, and back injuries.
For instance, if an employee dismantling a client's workstation gets so caught up in the clutter that they fall and tear an ACL, you don't want to have to foot the bill out of your IT business's bottom line. Hospital bills can be expensive – and if you're paying for an employee's wages while they recover, the financial burden is even heavier. Plus, if you're currently operating without Workers' Comp coverage, you could be subject to fines.
Employment Practices Liability Insurance for IT Businesses
You never know what a disgruntled ex-employee may allege. That's why there's a policy that protects your IT business from lawsuits involving employment practices violations, known as Employment Practices Liability Insurance. Should you be hit with a lawsuit claiming you discriminated against an employee based on their age, race, or gender, the cost of defending yourself could be significant.
The same is true for wrongful termination suits – perhaps the more likely scenario for your IT business. Sometimes you simply can't explain well enough the reasons behind letting an employee go. And if they end up thinking your reasons were unjustified, you want to make sure your income is secure. Contact a TechInsurance agent today for more information on this policy.