Tuesday, December 9, 2014

What Insurance Should a Technology Start-Up Consider?

At different stages of the Start-Up process, you may want to consider different policies. 


In the beginning stages you may want to pick one or two of the following policies because of limited resources. 


Once you procure funding and are trying to attract the best of the best, you may want to purchase all of the policies below.




Here are the policies you may want to consider in no particular order:



Technology Errors & Omissions (Tech E&O)
Insurance for failures in your technology service that could cause
customers damages. Tech E&O is most likely your most important
policy because most everything you do would be considered a professional
service and is excluded from the General Liability policy.



•Data Breach/Privacy Coverage – In case you lose
sensitive employee or customer data, this policy pays to notify, monitor
credit, and anything else you need to do in case of a breach.



•Media Coverage – If you are doing any kind of
media/social networking. Some of these coverages are added automatically
to the Personal & Advertising injury section of the General
Liability policy, but are explicitly excluded for companies with a media
focus. Examples of these exposures include: unintentional copyright
violations, libel, slander, etc.



•International Coverage – If you have operations outside the coverage area (US, US Territories, and Canada)



•General Liability Coverage – This is your most basic
insurance that most contracts will require: covers basic trip and fall.
You can also add supplementary auto coverage for rented and non-owned
(including employee) vehicles. If you have company vehicles, you should
consider purchasing a Business Auto Policy.



•Property – Cover your computers, servers, tenant
improvements. In addition, business income is added to this policy; look
for coverage including business income for Denial Of Service attacks,
etc.



•Directors & Officers – Insurance if you have
investors or stakeholders. Directors and Officers can be held personally
liable for decisions of the company, so this coverage can be crucial in
securing high profile board members.



•Disability – Insurance for the owners if they are in an accident and no longer able to work.



•Key Man Life – Insurance policy in case something
happens to your partner. Both partners buy life insurance policies on
each other, so they can buy out the partner’s share. This way you avoid
becoming partners with that person’s significant other.



•Health Insurance – Great way to keep your employees on board and attract great talent.



•Workers’ Compensation – Mandated by CA state law even
if you just have one part time employee. Good news is that rates for
most technology workers are very inexpensive.



•Employee Practices Liability – Protect yourself from employment related lawsuits: wage & hour, wrongful termination, discrimination, etc.



Some of these policies are offered in packages, while others are sold
separately. Most large companies that contract smaller technology
services companies will require you to have General Liability,
Technology E&O, Workers’ Compensation, and Business Auto.



Talk to an independent agent to see which of these coverages would be a best fit for your business.

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