Technology businesses are responsible for delivering reliable and secure products. However, mistakes, errors, or omissions can occur, leading to financial losses or reputational damage for their clients. Professional indemnity insurance, commonly known as errors and omissions insurance (Tech E&O) in North America, provides coverage in such scenarios. A policy can help cover legal fees, settlements, or judgments resulting from alleged negligence or failure to deliver the agreed services, safeguarding your balance sheet and credibility.
Tech companies, SaaS providers and software developers are faced with a variety of risks often dependent upon the nature of the services offered. Specific consideration should be made to purchasing sufficient professional indemnity (otherwise known as professional liability insurance), sometimes overlooked, if there is not a contractual requirement to purchase. However the cover is argurably the most important insurance a company working in the technology sector could buy.
Technology companies are prime targets for malicious actors seeking to exploit vulnerabilities. Cyber insurance is a crucial component for software companies as it provides protection against data breaches, network security incidents, and other cyber-related risks. This coverage can assist with forensic investigations, legal expenses, customer notifications, and potential lawsuits, bolstering your company's reputation and preserving customer trust.
Legal actions made against the directors arising from alleged breaches of duty, breaches of care, conflicts of interests, neglect, mismanagement, or regulatory non-compliance, can be time consuming and expensive to defend. Directors and officers insurance can provide a financial protection, offering the management protection protection against claims whereby they can be held personally lible for their actions on behalf of the company. The cover can also offer investors comfort because as a stakeholder they could seek to hold individuals responsible.
It's common for technology companies often engage with client, whether through business meetings, installations, or product demonstrations. Public liability insurance protects your company against bodily injury or property damage claims that may arise. If any manual work is undertaken, this should be specifically disclosed to insurers to ensure coverage is provided. The coverage can provide financial support for medical expenses, legal defense costs, and settlements, protecting your software company from potential legal action and unexpected financial costs.
Whereas, employers' liability insurance is one of the few types of compulsory insurance in the UK. Which will offer financial protection against compensation claims arising from injury or illness at work. Please not that employers' liability will only be available to UK based employees.
If your technology business manufactures hardware or provides a tangible product, other than printed material, software, hardware, or peripheral equipment to be used by computer or printed material. Product liability insurance combined with professional indemnity insurance is a very important consideration.
The business insurance will provide financial protection against liability claims arising from injury or property damage as a result of a fault with a good you have provided. The two covers should be purchased from the same insurer because it can be diffcult to seperate a claim arising from a product fault or with the advice / specification.
Insurance is essential for technology companies to safeguard against a wide range of risks, protect their assets, and ensure the continuity of their operations. It provides financial protection and peace of mind, allowing companies to focus on innovation and growth without being overly exposed to potential liabilities in a rapidly evolving and dynamic technology sector. Below we look at some key considerations why insurance is important for technology companies:
Technology companies are exposed to a range of risks, including cybersecurity threats, intellectual property disputes, product liability, and business interruption. Insurance provides a financial safety net, helping to mitigate the impact of these risks on the company's operations and finances.
Technology companies provide services and products that may not always meet client expectations or could have unintended consequences. Professional indemnity insurance, also known as errors and omissions (E&O) insurance, protects against claims of negligence, errors, or omissions in the delivery of your services.
Cybersecurity continues to be paramount for technology companies. Cyber insurance helps protect against the financial consequences of data breaches, hacking, and other cyber threats. It can cover the costs of notifying affected parties, legal expenses, and the costs associated with restoring systems and data.
Technology companies often enter into contracts with clients, suppliers, and partners. These contracts may require specific insurance coverages such as professional liability insurance, to be in place to meet contractual obligations and manage risks associated with the business relationship.
Technology companies often rely on intellectual property, including patents, trademarks, and copyrights, for their innovations and products. Intellectual property insurance can help protect against the financial impact of legal actions related to IP infringement or misappropriation claims.
Many technology startups and growth-stage companies receive funding from venture capitalists and other investors. Investors may require the company to have certain insurance coverages in place to protect their investment and mitigate risks.
Technology companies that manufacture or sell products may face product liability risks. If a product causes harm or property damage, product liability insurance, also known as general liability insurance, can provide coverage for legal defense costs, settlements, or judgments.
Technology companies with global operations face additional risks related to different regulatory environments, cultural nuances, and geopolitical events. International insurance coverage can help address the complexities of operating in multiple regions.
Technology companies heavily rely on their operational infrastructure, and any disruption to business operations can result in significant financial losses. Business interruption insurance helps cover lost income and operating expenses in the event of disruptions caused by covered perils, such as fire, natural disasters, or cyber liability incidents.
Attracting and retaining top talent is crucial for technology companies. Employee benefits, including health insurance, life insurance, and disability coverage, can play a vital role in employee recruitment and retention.
Employers liability insurance is the only complusory insurance required under law, if you have employees based in the UK. However, it is strongly recommend that you consider professional indemnity, cyber insurance, directors and officers liability, and office insurance.
Business insurance for tech and software companies can start from £425 per year or £36 per month. This would typically include, £1 million professional indemnity, £1 million public liability, and £10 million employers' liability. The above will pricing will be dependent upon the activities and size of the business - up to £150,000 turnover or projected turnover for the first year.
The are a variety of different types of business insurance available dependant upon your requirements. We recommend you arrrange a call back at a convienent time to discuss your business.
Below we talk to James McBride Wilson at 'CFC Underwriting' and Anna Husband at 'Hiscox Insurance', to obtain their perspective on the challenges they face
Your business will need professional indemnity insurance if you provide a service, advice, consultancy, design, plans or specifications to a client.
Technology Errors and Omissions Insurance, or Tech E&O, is a type of insurance coverage designed to protect technology companies, professionals, and service providers from liability claims arising from errors or omissions in the performance of their technology services.
A managed service provider (MSP) is a company that provides outsourced IT services to support businesses. An MSP can take on responsibility for the day-to-day operation, management, and maintenance of their clients' IT infrastructure, including hardware, software, network, and security.