Finding the right insurance for your data science company is an important step in protecting your business and achieving long-term success.
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As a data science company, your firm could be held liable for risks that are common to most companies, such as fire, theft, or someone suffering an injury on your property. In addition to these hazards, there are other risks that are particularly relevant to data scientists. Your clients may entrust important data to you, and if hackers are able to steal it, you could be held liable. Your clients also may make important decisions based on the advice or recommendations you provide to them. If they take action based on inaccurate information, it might have serious financial consequences, and they could sue you.
Dealing with a major lawsuit or settlement would be financially devastating for many companies. That’s why it’s a good idea to consider purchasing business insurance that can financially protect your company from common risks, whether it’s a lawsuit brought by an unhappy client, physical damage caused by an unexpected disaster, or a cyberattack that damages data.
What insurance coverage do I need for my data science company?
There are many types of insurance available, but these types of coverage are particularly important for data science professionals to consider:
As a provider of data science services, your clients trust the recommendations and advice you provide in order to make major decisions in their business strategies. If your company provides a client with faulty analyses and guidance, and the client follows your recommendations, the client could stand to lose significant amounts of money. If that happens, your client could sue you for damages. Professional liability insurance exists to protect you from the risk of lawsuits brought on by dissatisfied clients alleging failures in services, advice, or professional work.
- Your company specializes in retail data intelligence, and one of your clients is planning to launch a new product. They hire your firm to help them gauge the level of demand for the product. Your research suggests that there is a high demand for the product among millennials on the West Coast, so your client creates a major launch campaign in that market based on your firm’s recommendations. The demand for the product turns out to be very low, causing the company to lose hundreds of thousands of dollars. They sue you for damages.
Most companies have some level of general liability risk, even if they work in industries that are not physically dangerous. If you meet with clients at your offices, visit clients at their offices, or have outside workers such as delivery people on your property, it’s a good idea to consider general liability insurance. If a non-employee is injured while on your property or one of your employees accidentally damages a client’s property, you could be held liable. General liability insurance covers common bodily injury and property damage risks, as well as personal and advertising injuries, which can include libel, slander, and copyright infringement.
- Bodily injury: While delivering new computers to your data science company, a delivery person trips on an uneven entrance mat and falls, sustaining a head injury. Your general liability insurance would cover medical costs and legal fees if the delivery person sues.
- Property damage: Your employees visit a client’s office for a consultation. One of your employees trips and knocks over an expensive decor item, damaging it. Your general liability insurance would pay for the damages.
- Personal and advertising injury: Your firm creates a new logo for an ad campaign that unintentionally looks very similar to another company’s logo. The other company sues for copyright infringement. Your general liability insurance would pay for the lawsuit and any settlements or judgments against you.
As a data science company, it’s likely that you deal with and rely on a large amount of data, some of which could be highly sensitive. Even if your company is experienced in managing cybersecurity, cybercriminals frequently develop new methods of breaking into digital systems, so there’s always a risk that you may be hacked or your data may be held for ransom. If hackers are able to access private data through your systems, your company could be held liable. The costs of recovery can be high, and news of a cyberattack can damage your reputation. Cyber liability insurance provides financial protection to help your company respond to cyberattacks, and insurers often provides resources to help you prevent them as well.
- Your client hires you to perform analyses on their customers’ behavior to better understand buying behavior and customer lifetime value. The client gives you a large dataset to work with, which includes confidential information on their customers. Hackers break into your network and steal this information. Your client sues you for failing to protect their data. Your cyber liability insurance would cover the lawsuit and any settlements or judgments against your company.
Most companies operate in space they rent or own, and as a company in the IT space, you likely rely on high-value technology such as computers and servers. If an unexpected disaster strikes, repairing or replacing your damaged property can be costly. Commercial property insurance will help your company recover if a catastrophe occurs.
Commercial property insurance covers the following:
- Buildings belonging to or leased by your company
- Contents of the building, including furniture, computer equipment, and artwork
- Property of others while it is under your care, custody, or control
- An electrical fire breaks out in your company’s offices, destroying your company’s computers and damaging your office building. Your insurer will pay for the cost to replace the damaged computers and make repairs to the building.
- A business owner’s policy bundles general liability, property, business income, and extra expense coverage into one package. This type of insurance can help small and midsize companies save money on premiums while obtaining a wide range of coverage.
- A fidelity bond is a type of insurance that covers you from theft or fraud committed by your employees. This coverage would protect you if an employee unlawfully accesses confidential customer data.
- Business income insurance will reimburse you for lost income and operating expenses if your business is unable to operate due to a covered reason, such as fire, storm damage, or other property damage.
- Workers’ compensation insurance is legally required for companies with employees in most states. It covers employees’ medical expenses and lost income if they are injured while working. For IT companies, repetitive stress injuries are common in workers’ compensation claims.
- Commercial auto insurance is necessary for businesses that own vehicles titled under the business’s name. If the driver of the vehicle is at fault in an accident, commercial auto insurance will cover bodily injury and property damage. It also covers the value of the vehicle itself if it’s damaged by a collision or other peril.
Your data science company could be held liable for a variety of major risks. It’s important to consider your company’s individual risks and purchase the right insurance coverage. Business insurance can financially protect your company from unexpected disasters, whether it’s a fire or serious storm that damages your offices, a lawsuit brought by a dissatisfied client, or a client injury that happens on your property. With the right insurance coverage, you and your clients will feel confident in the knowledge that your company would be able to cope with any major incidents that arise.