Technology (Tech) Business & IT Insurance

The internet has greatly changed the way business is conducted. Before the web, all businesses needed brick-and-mortar locations in addition to the funds to buy or lease property. Many businesses today simply begin with a money-making idea, a business plan, and a website. 

Consumers, too, have largely switched to shopping, banking, and doing other day-to-day tasks online. Most businesses need an internet presence in today's economy, which is a huge cost in addition to rent and other overhead. That's why online and IT businesses still need to protect their business investment with internet and IT business insurance.

Fortunately, a local independent insurance agent can help your business get equipped with the right technology insurance. They'll make sure you get set up with all the coverage you need. But first, here's a closer look at internet and IT business insurance, what it covers, and why it's necessary.

What Is Technology (IT) Insurance?

Operating an IT business or internet-based business can put you at risk. You’re likely handling not only your website but also email, social media, and digital assets. You may also have access to other companies' sensitive data. 

Although you’re operating on a web-based system, there are still copyright, libel, slander, and trademark laws to consider. A standard business insurance policy isn't likely to provide the protection you need if you’re accused of web-based copyright infringement, data breach, or data loss.

Technology (IT) insurance is also referred to as tech errors and omissions insurance or technology E&O insurance. This is a special type of professional liability insurance that can help reimburse businesses for negligence like professional errors and omissions that occur while performing their services. 

For example, if the head of your business's marketing department designs an advertisement that another business claims infringes upon its copyright, your company could be sued. In this case, your tech E&O insurance could pay for the associated expenses, including your legal defense in a lawsuit.

Top Risks for Internet and IT Businesses to Consider

Internet and IT businesses have just as many risks to consider as brick-and-mortar businesses. Information technology liability insurance can provide protection against losses stemming from a number of common threats, including the following:

Another issue that many insurance companies face is a lack of information regarding web-based business risks. Every day, new developments occur that offer benefits to web-based businesses and IT companies and also put them at increased risk of adding costs to the business. 

Because insurance companies don't have a fail-proof way to calculate the monetary potential of cyber risks, they typically write exclusions into IT liability insurance policies to limit their exposure. Be sure to review your policy's exclusions with the help of your independent insurance agent.

Who Needs Technology Business and IT Insurance?

Many different businesses within the tech or internet industries need coverage against a host of potential risks. Professionals in the following fields should strongly consider getting a policy:

If you work in any of these niches, a technology business and IT insurance policy could be just what you need to guard against many different financial losses. Without the right coverage, your business could potentially face bankruptcy after just one major incident, like a lawsuit following a data breach.

Why IT Liability Insurance Is Necessary

It can be difficult to determine your exact risks, whether you operate an online business, an IT consulting company, or a computer repair service. Starting an online business, whether home-based or out of an office, involves risks other than those you would encounter with a storefront business. 

When you create a website, you have the same legal liability as the publisher of a print newspaper or magazine, but most site operators don’t treat the content the same. That’s why internet business insurance is critical. 

An IT liability insurance policy can help your business recover from these possible situations:

• An employee places a copyrighted image on your homepage without the owner’s consent.
• The name of your website and business is similar to that of a well-established website with a copyright.
• When writing press material or contributing to an online forum, an employee writes disparaging remarks about the competition.
• An outsider hacks your site and shuts down all operations.
• A disgruntled employee tampers with customer payment information.
• A hacker breaks into a customer database and steals private information, and as a result, the store sues the software company.

Even with safety precautions in place, liability insurance is the best way to deal with unexpected circumstances. Make sure you set the right coverage limits to protect your company assets.

Your telecommunications or other tech business could face potentially hefty financial losses if any of these incidents occurred. Fortunately, having tech E&O insurance can help your business get back on track.

How Is Insurance for Software Companies Different?

If you work in the software industry, you’re probably familiar with securing contracts for certain development projects. Many contracts specifically address indemnity. If your software product causes a glitch that makes the company lose business and revenue, you can be held responsible. Make sure that you read the contract carefully before signing. 

If you’re not fully protected with the right kind of insurance and enter into a contract that places full responsibility on the software company, your business could be at financial risk. Software business insurance provides protection for your business's operations and services. 

This financial protection can cover legal claims against you and help you to keep your business running. Several types of coverage may be helpful in determining the best way to manage your risks.

What Kind of Insurance Do Internet and Tech Businesses Need?

Your internet or tech business likely needs several types of coverage that can be found together in a convenient tech E&O insurance policy. Additionally, you can purchase a small business insurance policy or a business owners policy (BOP) and add any extra types of protection your internet business requires. 

Many internet and tech businesses need the following types of coverage:

• General liability insurance: This can reimburse your business for third-party claims of bodily injury or personal property damage, including lawsuit expenses if you are sued.
• Commercial property insurance: This can reimburse your business for repairs or replacements of your buildings, equipment, and inventory if lost, stolen, damaged, or destroyed by a covered cause such as vandalism or fire.
• Commercial auto insurance: This can cover your business against losses related to company vehicles, such as theft, vandalism, accidents, lawsuits, and more.
• Cyber liability insurance: This can reimburse your business for expenses related to data breaches and cyberattacks.
• Business income insurance: This can help your business recover from covered temporary closures by continuing to pay ongoing operating expenses and providing a revenue stream.
• Workers' compensation insurance: This can cover employee medical expenses and partial wage replacement if a worker gets injured or ill due to a work-related incident. Typically, workers' comp is required of businesses that have employees in most states. 
• Commercial umbrella insurance: This can extend your business's existing liability coverage to limits of $1 million or greater to help you have a better chance of recovering from expensive lawsuits.
• Professional liability insurance: This is also known as errors and omissions insurance and will cover you if your performance doesn’t meet the client’s expectations. Ask your insurance agent if software copyright infringement can be added to your policy.
• Business owners policy: Commonly referred to as a BOP, this combines general liability insurance with property damage and business income coverage.

Your independent insurance agent can help you build a complete internet and IT business insurance policy that includes each type of protection your company needs. You might also want to inquire about fidelity bonds, which can reimburse you if one of your business's employees steals from a client.

Is Technology E&O Insurance the Same As Cyber Liability Insurance?

Tech E&O insurance isn't the same as cyber liability insurance. A cyber liability insurance policy is designed to protect businesses against costs associated with incidents of data breach or cyberattack, in which private or sensitive data, like customer credit card information or employee personal records, may be stolen, sold, or distributed without permission. This coverage can reimburse businesses for related lawsuits as well as for professional services needed to repair the damage.

A technology E&O policy is designed to cover internet and tech-based businesses against a multitude of risks. These policies include many different types of coverage, including liability, commercial property, and business income. You'll likely want to include cyber liability insurance as a vital part of your overall tech E&O or internet and IT business insurance policy.

How Much Does Technology Insurance Cost?

The cost of your technology insurance can depend on a lot of different factors. These often include the following:

• Location
• Industry
• Years in business
• Claims history
• Business operations and exposures
• The amount of coverage needed
• Policy limits and deductibles

An independent insurance agent can help you find affordable technology insurance near you.

Save on Business Insurance

Our independent agents shop around to find you the best coverage.

Request a quote

How to Protect Your Internet or IT Business

Insurance for technology companies can provide critical protection for your web-based business. Additionally, there are a number of strategies you can implement to reduce your exposure. Anticipating potential risks can help you avoid expensive problems later. 

Consider taking the following action steps to help protect your business:

• Conduct security audits: Have security experts examine your network and servers to uncover weak spots in your system. Reducing your risk also reduces the risk faced by your insurance company, which can potentially result in discounts on your internet and IT business insurance.
• Upgrade your digital defenses: Create policies and procedures that establish responsible practices within your company to prevent cyber breaches caused by hackers and human error. Make sure your firewall has the appropriate protection and can’t be penetrated, and change passwords periodically.
• Use cloud and off-site backups: If you work with sensitive or mission-critical data, implement extra data protection, such as remote backup storage, to protect against major data loss after a catastrophic event like a tornado or hurricane.

Being proactive in your business's defense against cyber threats can not only help you save time and effort later but also avoid needing to file a claim through your internet and IT business insurance. Remaining claims-free is another possible way to earn a discount from many insurers.

An Independent Insurance Agent Can Help You Find the Right Internet Business Insurance

Web-based businesses and IT companies face as many threats as brick-and-mortar enterprises. While the threats are different, they can have catastrophic results. 

One of the most important risk management measures you can take is to protect your business investment with an internet or IT business insurance policy. The best coverage will not only protect you against liability risks but also help to mitigate the consequences of a cyber-attack. 

An independent insurance agent can shop and compare policies and quotes from multiple carriers for you to find you the best rate. They can also help you file business insurance claims and update your coverage as necessary.