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The tech sector is fast-paced and growth-orientated. While other industries struggle to adapt to the modern world, IT businesses are the heart of many advanced economies. That fosters a positive and forward-looking mindset. 

However, many companies often fail to consider the importance of insurance and the value it brings in the event of damage or liability claims. IT businesses face a range of potential risks: cybercrime, workers' liabilities, and even property damage. Therefore, it is vital to take out IT business insurance to ensure that your business is covered no matter the eventuality.

This article provides an overview of the various policies for IT businesses and gives you tips for saving money on insurance.

Why Take Out IT Business Insurance?

It does not matter whether you run your IT business from home or rent a big office for a large staff; you are still at risk for financial losses from customer claims and property damage. You might assume that if you are very careful, you will never need to use insurance. However, not everything is under your control: cybercrime can devastate your reputation and digital assets, fires can burn down your property, and if you run an IT consultancy firm, mistakenly given bad advice can result in pricey litigation. 

Thus, when something unexpected happens, you want to be covered. There are also legal obligations, such as some states requiring companies to purchase workers' compensation, that affect insurance decisions. You need to review the laws specific to your state to determine what type of insurance is required by law.

A man and a woman looking at code on a computer screen

Who Needs IT Business Insurance?

IT business insurance can be bought to cover businesses in the tech sector. Here are some of the businesses and professionals that qualify for it:

  • Telecommunication companies
  • Software developers
  • IT service providers
  • IT consultancy firms
  • Computer consultants
  • Web designers
  • Programmers

Whether you work in the tech sector as a solo entrepreneur or as the head of a larger company, you benefit from IT business insurance. 

A software developer looking at code on two computer monitors while typing on keyboard

What Does It Cover?

IT Business Insurance consists of multiple different coverages. Here is a list of some of the most common policies included in the insurance package for IT businesses.

Professional Liability Insurance

Professional liability insurance is essential for professionals working in the tech sector. It covers any third-party claims of money loss due to the activity of the tech company while the company was working for the third party. Losses can result from errors and omissions such as programming mistakes, faulty code, mishandling client information, misplacing files, and other oversights.

Cyber Liability Insurance

Cybercrime is becoming increasingly common and criminals frequently target small- and medium-sized businesses. Cyber liability insurance will cover the cost of data breaches and cyberattacks, which includes the cost of data recovery, the cost of lost business, and legal fees if clients sue the company due to any damage to their reputation or assets.

Fidelity Bonds

If an employee at your IT company steals from a client, you will be covered for the client’s compensation. As a way to signify the purpose of the coverage, they are often also called employee dishonesty bonds.

General Liability Insurance

A requirement for most commercial leases, general liability insurance covers you for any property damage or bodily harm that occurs at or during work. This includes slip and fall accidents at the office and damage to a customers’ property.

Business Owners’ Policy (BOP)

BOP-s combines general liability insurance and commercial property insurance. If you have business premises, such as an office, you are going to want to ensure you are not just covered for general liabilities but also damage to the property. Such damage can be caused by fire, theft, vandalism, and many other events. Flooding and earthquakes are usually not covered and require separate insurance.

Workers’ Compensation 

In most states, workers’ compensation insurance, or workers’ comp, is a legal requirement. It covers the medical expenses, lost wages, and lawsuits resulting from a workplace injury or illness.

Other Insurance Policies to Consider

  • Umbrella insurance Extends your insurance coverage beyond the limits of your existing policy.
  • Business interruption insurance – If an event forces your company to reduce business through a temporary stop in operations, you will be covered for the lost revenue and expenses.
  • Employment practices liability insurance – This will cover legal expenses if an employee sues due to discrimination, harassment, wrongful termination, or other issues.
  • Directors and officers insurance – Any liabilities resulting from decisions made by the company's leadership are covered in the event of a lawsuit.
  • Commercial auto insurance – If your company has a vehicle used by employees, then you are required to purchase commercial auto insurance by law.

Closeup of someone's hands working on a motherboard

How to Save Money on IT Business Insurance?

When considering all the different insurance policies you need to purchase, it can seem extremely costly. However, it will pay off over time and save you money in the future if an unfortunate event occurs. Despite that, you can still save money on the policies you take out. Consider these tips:

  • Combine policies Many insurance companies can bundle policies together, which reduces overall insurance costs. This is known as bundling.
  • Ask for discounts – Always ask for a discount when purchasing insurance, you never know what offers an insurance company might be running.
  • Shop around – Whether purchased separately or in a bundle, get multiple quotes to find the best deal on the market. 
  • Pay in full – Paying the entirety of your insurance bill annually rather than monthly can save a significant amount of money.
  • Reduce risks – Installing sprinklers and burglar alarms, investing in cybersecurity, and hiring diligent employees are all helpful for reducing your risks on individual policies — the lower the risks, the lower your premiums.
  • Raise your deductibles – Increasing your deductibles will lead to lower premiums. However, you will need to have extra cash saved up in the event of a claim.

Send us an email, give us a call, or fill out the free quote on our website if you want to ensure your IT business.

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