Technology Services Insurance

What Type of Technology Services Insurance Do I Need?

What Does Technology Services Insurance Cover?

We understand that even thinking about business insurance can be overwhelming, so we do our best to give you the exact information you need without all of the heavy legal jargon. For starters, it’s helpful to know that there are three different types of business insurance you may purchase. Second, you may not be required to have all of the policies we’ll cover.

General Liability Insurance

When you start to consider tech services insurance, general liability insurance is likely what comes to mind. As the name suggests, this kind of insurance is the most generalized type. It covers bodily injury, property damage, and third-party accidents. For reference, a “third party” usually includes your clients or vendors. When you choose a general liability insurance plan, you also may have the option to add “contents coverage,” which may reimburse you for stolen property.

Even though offering technology services doesn’t seem inherently dangerous, accidents are possible with any business. The average claim for property damage or accidents in small businesses is $30,000. Without liability insurance, you would likely have to pay the entire bill yourself. We’re going to go out on a limb and guess that that’s not what you dream about spending $30,000 on.

If working in tech doesn’t seem as dangerous as, say, being a stunt professional, then what does business insurance cover? Here’s a scenario: you’re in a meeting with a client where you’re explaining how cloud backup works. You’re using dry-erase markers as props to illustrate your point, and in an accidental swoop, you knock over a cup of coffee, which ruins one of the client’s laptops.

Your client sues for the cost of replacing the laptop, and you either need to pay a settlement or for legal fees. Without business insurance, all of these costs would fall on your shoulders. However, if you have general liability insurance, your policy would defend the lawsuit and pay for some of — and potentially all of — any settlements up to your policy limits.

So what does general liability insurance typically cover in a technology services business? Here’s a recap:

• Third-party property damage (aka clients or vendors)
• Bodily injury
• Medical expenses
• Personal and advertising injury
• And more

General liability insurance usually does not cover:

• Personal property damage
• Professional services
• Employee injury and workers compensation
• Damage to your work
• Motor vehicles during business use
• Intentional injury or damage
• And more

Professional Liability Insurance

You give your best effort on every project, and clients trust your expertise. What happens if a client claims you did something that caused their business harm, though?

You may be able to use your professional liability insurance (sometimes referred to as errors and omissions insurance) to defend your reputation and protect your finances.

As someone working in technology services, you’re offering a professional service. As a result, clients can sue you for negligence and damages, whether you agree with the claim or not. Professional liability insurance can cover you if a client claims that you, your employees, or your business were negligent.

What does “negligence” look like for technology service providers? Imagine you propose a timeline for a project after the client has made it clear that the product timeline is crucial to them. You’re eager to please, so you get started on the work right away. However, you have a few setbacks and miss a couple of key deadlines. These deadline changes have set your client’s operations back significantly, and they file a claim against your company for negligence.

What options do you have? You could pay a settlement out of court or get a lawyer to defend the claim. Whether the courts determine you were negligent or not, you’ll likely be walking away with some bills to be paid. Without professional liability insurance, you would have to find the money in your business or personal finances to pay for the incident. With professional liability insurance, your policy would offset these costs, potentially saving your business.

Let’s review the scenarios that professional liability insurance typically covers:

• Legal defense costs
• Omissions or alleged omissions
• Negligence or alleged negligence
• Claims and damages
• And more

Having professional liability insurance does not usually protect you from:

• Property damage
• Intentional acts and omissions
• Bodily injury
• Medical expenses
• And more

Workers Compensation Insurance

Growing your business and bringing on employees is an exciting development, but one that comes with more responsibility. In most cases, the law requires you to have workers compensation insurance if you have part-time or full-time employees. This type of insurance policy covers medical bills, lost wages, and any legal costs associated with an employee who gets sick or hurt on the job.

Workplace injuries are expensive, so having workers compensation insurance is critical. The average cost of workers comp claims is $40,051, and even sprains or strains can cost businesses more than $30,000 an incident.

Workers compensation insurance for tech businesses can cover:

• Medical payments
• Lost wages
• Rehabilitation expenses
• Death benefits

Why Should You Get a Technology Provider Insurance Policy?

Stop and reflect on all the hours you’ve dedicated to learning your craft and building your business. You should be proud! It takes courage to chart your own path, and you deserve to continue to grow your business for as long as you’d like.

While thinking about the scenarios that you’d need to use your business insurance can be daunting, getting covered should be a happy occasion. After all, you get insurance for something that needs protecting. If you’re concerned about adding a monthly bill, know that you don’t need to pay for a large one-size-fits-all policy.

Your policy premiums depend on how many employees you have, your business location, the types of tech services you provide, your estimated revenue, and more. You can answer a few questions here to get a tailored estimate.

The average costs that uninsured small business owners are exposed to include:

• $30,000 for property damage or accident claims
• $39,000 for work injury claims
• $50,000 for reputational harm claims (e.g., slander or libel)
• $20,000 for a client slip-and-fall case

When it comes to your business and livelihood, it’s better to be safe than sorry. Forty-three percent of small business owners have reported being threatened with or involved in a civil lawsuit, which means it could happen to you too.

The real kicker is that you don’t necessarily have to do anything wrong for charges or costs to befall you. You could provide a reputable service, but if a customer decides that they’re dissatisfied with an outcome, they could sue. Even if the court determines you’re in the right, you could still rack up your own legal fees.

If you were to have technology providers insurance, though, those expenses and legal fees likely wouldn’t have to come from your personal finances.

Business insurance comes with benefits that have nothing to do with accidents or negligence.

Showing proof of insurance can help you:

• Rent out a room or space for your business
• Convince other people to work with you
• Earn clients’ confidence
• Open another location
• And more!

When you buy insurance through Simply Business, you’ll receive a certificate of insurance (COI), so you can provide proof of coverage.