Learn about insurance for SaaS companies for the enterprise software they develop and run. This coverage protects your software as a service business from negligence, & other liabilities including data breaches from the cloud storage of personal, sensitive and confidential information.
Insurance for SaaS Companies
When it comes to owning a software as a service company, there are a lot of things that you need to pay attention to. Insurance for SaaS companies is one of the most important as well as one of the most overlooked. Having the right insurance is important for any company, but it is especially important for technology companies - especially when it comes to certain types of insurance.
Let's take a look at some of the insurance for SaaS companies options that are out there for technology companies and which ones you should be focusing on.
There are lots of options, but some types of business technology insurance are definitely more important than others.
How Commercial Insurance Works For Mobile App Developers
There are some different types of insurance for SaaS companies. Having the right commercial insurance can mean protection in various areas that you would not normally spare a thought for.
For example, some app developers have thought that there app was completely secure and then saw data breach that got them sued by thousands of different companies and persons. This can mean the end of a startup with limited funds. That's why the types of insurance listed below are more important than ever for an mobile app development business.
Another potential claim example is if you were hired to design and create iOS app - which you did flawlessly. But your client was also expecting an Android version - that was never mentioned in the contract. Your client then sues - even if you did nothing wrong, you are going to spend thousands in legal fees.
Let's start by talking about general business insurance for SaaS companies. This usually consists of two different types of insurance and can sometimes be bundled together. Business insurance is vital for any business no matter what they do. The only exception may be people who work from home and have no physical location - such as someone who works on a computer - but even then, having property insurance for your home can keep your business running if something happens.
Liability Insurance: General liability is the most common type of commercial insurance out there. General liability protects technology companies like software-as-a-service organizations in a number of ways. When most people think about general liability insurance, they are thinking of slips and falls that can happen on the property, or problems that come from the product or service itself. For example, liability insurance may help protect a department store from someone bringing a lawsuit because they slipped; or it may protect a hairdresser from someone suing them for ruining their hair. But when it comes to technology companies, especially subscription software, there is higher potential for liability.
Property Insurance: Property insurance protects your physical location. If you have a subscription software company, then you're probably going to have to have a location where employees may work, or customer service can be conducted and where software is improved or created. Very few subscription software companies are run by a single individual out of their home.
Property insurance protects you when things like natural disasters happen. For example, if a tornado blows through your store and ruins all of your equipment, property insurance may protect you. The same goes for fires and other damage. When you have lots of new technology, like servers and computer racks, the cost of replacing them can be enormous. Property insurance can help with that.
Important Types Of Commercial Insurance For Tech Companies
As a technology company, there are some important types of insurance for SaaS companies that you should have. There is not a specific type of insurance that is actually called technology insurance, but there are some policies out there that tech companies should consider. These are important types of insurance for any company and that includes subscription software. Let's take a look at four types of insurance that you should have and why they are important for your type of business.
Errors & Omissions (E&O)
Applications are used in a variety of ways, and if your software is used by other businesses for any commercial purpose, having errors and omissions insurance (aka professional liability), is absolutely vital. If you are offering a software subscription to a personal tax application, the damage that your software package can do to that individual is fairly limited. But when you are working with businesses, your application can cause problems that cost hundreds of thousands of dollars and affect many people's lives. That's why errors and omissions insurance is important.
E&O insurance protects your from losses related to malfunctions and product failures or client satisfaction related legal action. Professional liability insurance can hep pay for the legal fees, settlements, damages, and other financial losses you suffer because of a covered claim.
For example if your service is down, your customers may lose money - and you could get blamed and sued for those losses. Also if your software isn't working up to certain client's standards, they still can sue you for negligence, misrepresentation, or failure to perform, and other claims.
If you are responsible for the security of data, then you may need data breach insurance. It's easier than most software as a service companies think - to expose their data that leaks their client's personal or confidential information.
Cyber liability insurance is a type of insurance that protects you in case of a data breach. If you have a software subscription company, then you are definitely going to be collecting some form of customer data and keeping it on file. That's how you do your regular billing for the software service. But if that data gets leaked and used by identity thieves, you want to make sure that your company is protected; that's what cyber security insurance provides.
You need to be certain your internal IT infrastructure is secure, and also make sure that any 3rd parties (web hosting, data centers, cloud servers etc.) you use are contractually required to have the same or greater levels of data protection.
Worker's compensation is a type of insurance required in most states. If you have employees, and they are not independent contractors, then you're going to need workers comp insurance. Worker's compensation provides employees with money for medical bills as well as for the money that they would have lost if they have to take time off of work because of an injury that they sustained at work. This type of insurance protects you as a company because employees are not able to bring litigation if they are hurt on the job.
Commercial umbrella liability gives you extra coverage that you may not get with the other types of insurance for SaaS companies you choose. It extends he limits and can fill some coverage gaps of your other liability policies. You need to talk with your broker, and find out what the challenges are for your specific type of SaaS business.
Having a subscription software company can mean different kinds of liability than for restaurant, and your agent will be able to address any gaps in your liability coverage that might be filled in by umbrella coverage.
Other Types Of Insurance For Software Services Companies
There are a few other types of commercial insurance out there that you should be aware of. Let's take a look at two additional types of business insurance policies:
- Employement Practices Liability (EPLI): Employement practices liability insurance protects you against employees or others bringing claims against you for discriminatory practices, sexual harassment and quite a few other things. Sometimes, employees or ex-employees can bring frivolous lawsuits that have no basis in fact, but this insurance plan keeps those lawsuits from costing you money.
- Business Income: Also known as business interruption insurance, it covers the loss of income that a SaaS business suffers after a disaster. The income loss covered may be due to the closing of the business facility or due to the rebuilding process after a disaster.
Insurance for SaaS Companies - The Bottom Line
We hope this article on insurance for SaaS companies has been informative. The bottom line is that there are a lot of different types of tech insurance out there for software companies. You should not only understand what types of insurance are available, but also what insurance types are required by your business. Understanding what type of insurance your Saas company needs will go a long way towards helping you to protect yourself if things go wrong. Startup insurance, saas insurance, startup business insurance costs, e&o insurance for startups, startup insurance company, d&o insurance for startups, startup founder insurance and startup insurance broker.