From professional liability to data breach insurance, learn how to understand and purchase the right insurance for your IT or technology firm. Check out our comprehensive articles and resources to discover how you can protect and grow your business.
Information Technology Insurance Basics
Types of Information Technology Insurance
Who needs Information Technology Business Insurance?
If you’re in the IT business, whether you’re a small business or large company, there is liability and risk in everything that you do. You may be working with sensitive data, holding client meetings onsite, or installing a server at a customer’s office—all of which may expose you to certain inevitable risks. No matter how careful you are or how buttoned-up your team may be, accidents and mistakes are bound to happen, and no business is immune from this possibility. Even if you’ve had a flawless track record, past performance is no guarantee of future results. Moreover, there are some situations that are simply out of your control. In order to better protect yourself, your business, and those in your employ, consider obtaining a comprehensive insurance package for your business.
You should consider insurance for your IT firm if any of the following apply:
- You do work for clients that creates professional liability
- You have employees that work for your firm
- You own valuable items titled in the business name, including furniture, specialized equipment, or computers
- You store confidential digital data about clients, individuals, employees, or others
- Your firm owns vehicles titled in the business name
- You have an office that clients and customers visit
Information Technology Insurance by Profession
Why is Information Technology Insurance important?
Technology-based services and products can be complex in nature. Any small error or omission can lead to large financial consequences.
Benefits: In the IT industry, you may be working with fairly complex systems or software, meaning any minor detail that you miss could lead to disruption or financial losses for your customers. With the right insurance protection, like professional liability insurance, your firm can be financially protected in case an unhappy client sues.
Risks: Without the proper insurance protection, your company could be held liable for any costs associated with your professional errors or omissions. Judgements, settlements, and defense costs could cripple your business financially. Particularly for small IT firms, the right insurance coverage could mean the difference between continued business and closing up shop.
Putting your clients at ease and winning new clients.
Benefits: Clients want to know that the quality of the services they are purchasing are first rate. Buying professional liability insurance is a signal to your clients that you are providing a guarantee for the quality of your services. Should any error or omission occur, you have access to a financial safety net that will compensate the impacted customers.
Risks: Without investing in professional liability insurance, your company would be responsible for any costs associated with a faulty product or service and legal fees incurred to defend against any potential lawsuits from clients. Costly lawsuits and settlements can put small businesses at risk for bankruptcy.
Some types of insurance, including workers’ compensation insurance and disability insurance, may be required by law.
Benefits: Although business owners can hope that no one will be harmed on the job or become disabled, accidents and illnesses do happen. You are required by law in most states to purchase workers’ compensation insurance and disability insurance for your employees. When an illness or injury happens, you will have peace of mind that your insurance will cover the costs of the situation.
Risks: If you do not invest in workers’ compensation insurance and one of your employees is seriously injured on the job, you will be responsible for his or her medical expenses and lost wages. In some states, not carrying workers’ compensation insurance is a felony and may also result in a significant fine or imprisonment. Similarly, long term disability insurance is also required by law in many states.
Accidents and unexpected events can happen.
Benefits: Business insurance gives your company financial protection. By purchasing insurance, you protect the investments of time and capital you have made into your business. If an adverse event occurs, you can feel more secure knowing that you have a safety net that covers related costs and helps ensure the continued operation of your business. Insurance professionals can also help you proactively assess the risks associated with your business and consult on the most suitable plans.
Risks: While it is easy to get caught in the belief that “it won’t happen to you,” the truth of the matter is small businesses can easily go out of business with one devastating incident. Whether it is human error, accident, illness, data breach, or property damage, protecting against the risks that can strike any operation is critical to keeping your company healthy.