In today’s digital economy, web hosting is an essential service, with hosting companies providing the technology to store and process websites and web applications. As a web hosting company, by providing hosting services for customers’ web properties, you open yourself up to a number of risks, as clients depend on your services to conduct their business. If there is any failure in service on your part, there is the possibility that a client may sue. In addition, your company is exposed to more common risks, including cyberattacks, natural disasters that damage your property, theft, and more.

It’s important to consider purchasing the right set of business insurance policies in order to protect your company from business risk. Dealing with a major lawsuit or settlement would be financially devastating for many companies. Your insurance can shield you from a variety of risks, whether it’s a physical disaster like a fire, a lawsuit filed by a dissatisfied client, or a cyberattack that puts your network out of commission.

What insurance coverage do I need for my web hosting company?

While there are many types of coverage for companies to consider, these insurance policies are particularly important for web hosting companies to consider:

Professional Liability Insurance

Professional liability insurance is a key coverage for web hosting companies to consider. Your customers may rely heavily on their websites or web applications to sell products or obtain customers. If they experience errors or service failures caused by your web hosting, slow loading times, or other issues, they could lose significant amounts of revenue, which might lead them to sue you for damages. Even if the problem they experienced was not your fault, a client could sue you in the belief that your company was at fault. Professional liability insurance can help protect your company from the risk of lawsuits brought by unhappy customers.

Example:

• Your web hosting company is hit with a DDoS attack that causes outages for the websites of many customers, breaching your guaranteed service uptime of 99.9%. A drone company that uses your hosting services planned to launch a major new drone on the day of the attack, and its customers were unable to access its website to purchase the product during the outage, causing the company to lose thousands of dollars in revenue. The company sues for damages. Your insurer would cover the lawsuit and any damages or settlements.

Cyber Liability Insurance

As a web hosting company, you are aware of the importance of taking precautions to protect yourself from data breaches and cyberattacks. While it’s likely that your company has strong cybersecurity protocols in place, cybercriminals frequently develop new methods to exploit security vulnerabilities, which means that it’s impossible to be prepared for every possible attack. In addition, there’s always a chance that human error could leave a loophole that hackers could take advantage of. The costs of recovering from a cyberattack are high, and news of hacks can have a disastrous effect on your reputation as well. Cyber liability insurance can provide financial assistance to help your company stay in business in the event of cyberattacks.

Example:

• Hackers break into your customer database and access personally identifiable information about hundreds of your customers, including email addresses and credit card numbers. Your customers sue your business for failing to adequately protect their confidential data. Your insurer will pay for your legal fees and any settlements or judgments in the case.

Commercial Property Insurance

Web hosting companies depend on expensive and specialized equipment such as computers and servers, as well as the space that houses these items. If an unexpected disaster damages your equipment or building, it could be difficult and expensive to repair or replace. Commercial property insurance can make recovery easier by reimbursing you for the cost of replacing damaged property. Commonly covered perils include fire, vandalism, windstorm, and water damage.

Example:

• A severe storm knocks down power lines and trees, causing damage to your server farm. Many of your servers and equipment are destroyed, resulting in hundreds of thousands of dollars in damage. Your commercial property insurance will pay for the cost to repair and replace the building property and servers that were damaged.

General Liability Insurance

General liability insurance can protect your company if someone sues you with claims that your business caused bodily injury, personal injury, or property damage. Even in industries that are not physically dangerous, it’s possible someone could be injured while visiting your offices, or an employee might accidentally damage a client’s property while attending a meeting offsite. General liability insurance covers these third-party bodily injury and property damage risks. It also covers personal and advertising injuries such as libel, slander, and copyright infringement.

Examples:

• Bodily injury: While delivering electronic equipment to your company, a delivery person slips on an icy patch in your entryway and falls, fracturing his ankle. Your general liability insurance would cover medical costs and legal costs if the delivery person sues.
• Property damage: Employees of your company visit another company’s offices. They accidentally damage an expensive item of furniture. Your general liability insurance would pay for the damage.
• Personal and advertising injury: In an ad campaign promoting your web hosting services, you use a logo that looks very similar to another company’s logo. The other company sues you for copyright infringement. Your insurer would pay for legal defense and any settlements.

Additional Coverage

• A business owner’s policy can be a great choice for small and midsize businesses. It combines general liability, property, business income, and extra expense coverage into a single package, which is often cheaper than purchasing comparable coverage separately.
• 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.
• Employment practices liability insurance protects your business against lawsuits by employees accusing your business of wrongful treatment such as discrimination, harassment, or other employment-related issues.
• 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.

Pricing and Quotes

Pricing for business insurance will vary based on the type of insurance coverage and the risk profile of your business. Insurers consider factors such as:

• Business size
• Industry
• Location
• Number of employees
• Claims history

Businesses with higher risks will have higher premiums than those deemed lower risk. For example, a web hosting business with a history of frequent claims will face higher premiums. Premiums also rise as you increase the limits of insurance. Different insurance companies have different models for rating risks, so it is worth comparing pricing across different insurers.

In order to get an accurate estimate on pricing, it’s best to get a quote from a reputable insurance company. Below we’ve highlighted a few of our trusted partners who offer coverage for technology businesses:

Provider	General Liability	Professional Liability	Business Owner's Policy
Embroker	??	??	??
CoverageSmith	??	??	??
CoverWallet	??	??	??
Hiscox	??	??	??
Thimble	??	??	??

Final Word

Purchasing the right insurance coverage can protect your web hosting company from a variety of major risks. In addition to common risks like property damage and injuries, you could be sued for your professional work or have your business brought to a halt by cyberattacks. With a wide range of insurance coverage, you and your clients can rest assured that your company will survive an unexpected disaster.