New business owners can get lost in all of the insurance jargon. They need to be insured, and they want it done in the most cost effective way. Sound familiar? But not knowing the ins and outs of insurance can lead to really bad gaps in coverage. Imagine falling through the gap in between a dock and a boat. It would lead to quite an unpleasant experience. This similar type of unpleasant experience happens when your business receives a lawsuit or claim that you are not protected against.

So what types of insurance coverage does your business need? Because every business is unique the answer varies, but here are the most common lines of coverage used to get tech companies up and running.

PivotDesk Insurance

Are you in the early stages? The two basic lines of coverage you will need to get into an agreement for office space are General Liability and Workers Compensation. General Liability protects you for bodily injury, property damage and advertising injury claims arising out of your operations or premises. Workers Comp protects you for job related injuries to employees.

Are you starting to roll out your product or service? Whether it is a type of software, app or a cloud service, now is the time to add Professional Liability (sometimes called Errors & Omissions or Professional Indemnity Insurance) to your insurance policies. Whereas General Liability protects your business and employees for injuries and damage, Professional Liability goes a step further. It helps protect companies from the costs associated with defending a customer’s negligence claim. Say, for example, your product or service does not perform as intended or you make an error in performing your professional services. In these instances Professional Liability would kick in. What if contract terms of an agreement are violated, or a warranty or guarantee are not satisfied? Again, your Professional Liability policy could cover you.

Do you have investors? Investors, especially Venture Capitalists, will usually require that you show evidence of Directors & Officers Liability insurance as part of the conditions of funding your company. Being that a director can be held personally responsible for acts of the company, most directors and officers will demand to be protected rather than put their personal assets at stake. So, keep your investors happy and keep them insured.
Let’s discuss Cyber Liability. This line of insurance has grown as more and more businesses get hit by hackers, especially small businesses. It protects against sensitive information being lost or stolen, like say, your client’s names and contact information or your employee’s social security numbers. One surprising fact is that even if you do not host your data yourself, you may still be responsible. You may not be able to control how a cloud provider handles your data, but you can invest in an insurance policy to protect you if your cloud provider screws up.

While these are the most common insurance policies for small tech businesses, it does not mean they are all you need. The best thing you can do for your business is to meet with an agent who specializes in your industry and have them evaluate your business and your specific insurance needs. That way you won’t end up getting smooshed by the boat and the dock.

Been There Done That

Ginny Hunter