The world is always going digital. Nowadays, there seems to be a digital platform for almost every goods or service that companies offer, even the least expected ones. As more startups crop up globally, tech startups seem to be taking quite a significant share in the pie.
Whichever industry your startup is in, you need to cover yourself and your employees from risks with insurance covers. While insurance companies are still catching up with the ever-changing tech industry, there are still come clearly defined policies your tech startup could benefit from.
Cyber Liability Insurance
As a tech company, you are probably dealing with a lot of sensitive information, from your client’s data to other service providers information. Imagine the damage if there was a breach in your systems or cyber attack, leading to the loss of sensitive data? You could lose your business’s financial information or personal identifiable information your company’s system stores.
There are options to get both the first and third-party cover under one policy, where the first-party policy covers against any losses you company causes and the other one covers lack of action or negligence on your end.
Errors & Omissions Insurance (E&O)
It is also referred to as Professional Liability Insurance. This is liability insurance that protects the company and your employees against the professional services you offer. Such include claims by clients about unsatisfactory work delivery or any unintentional mistakes.
It might not be required by law to have this insurance, but if your startup will be offering professional services where a client might claim your services or advice caused financial harm, this is the insurance you need.
You might take all the caution in the world when advising clients or offering your services, but mistakes happen. One mistake might cost you and your business a lot of money, that’s why such a cover is ideal.
Directors & Officers Insurance (D&O)
D&O insurance covers risks against allegations, lawsuits, wrongful acts, damages and any costs of your startup’s directors, both present and current directors. As many states charge or prosecute company directors, individuals willing to take up roles as directors in startups want this type of insurance. It will protect their personal assets against such lawsuits against them.
Whether you are in the tech industry or not, a workers compensation cover is important. The cover protects and compensates your employees against illnesses and injuries they incur when working. It also replaces any lost wages that your startup might not be able to pay them.
Business Owner’s Policy
Insurance companies combine business property, and general liability covers to create BOP, which is mostly more cost-effective for small business than getting the two insurance covers separately.
As such, BOP will cover your startup from risks like damage of property, fire, theft, and applicable natural disasters. Another pro of this policy is that it covers any loss of income arising from interruptions within the business.
However, this cover does not apply to all tech startups. Most insurance companies use this on startups with 100 employees or less. It is best to confirm with your insurance providers whether your startup qualifies for this cover.
How Much Does it Cost?
There is no specific cost of either of these insurance covers. The pricing varies from one startup to the other. Underwriters use the below to arrive at a specific premium for each startup’s insurance policy:
- The size of your startup in terms of employees
- The location of the business
- The expected revenues
- The services your startup offers
- Expected number of claims using claim history from the startup itself or the industry
- The size of business premises, especially if you are an early startup with no projected revenues
While having your tech startup up and running is probably the dream of your life, covering yourself and your business from risks will keep that dream alive. One single lawsuit, breach of data, theft, fire or strike from a natural disaster can leave your startup dead and buried. Ensure that you consult an insurance advisor so you know the risks your tech startup faces and how you can mitigate these risks.