Technology Startup Insurance
Technology Startup Insurance: Protect Your Product, People And Profit.
First-time technology startup founders and entrepreneurs rarely give more than a passing thought to taking out insurance to protect their products, people, and profit.
At Rogue Risk, we help startup founders “Win” the insurance game by not just reducing their insurance premiums, but their Total Cost of Risk.
Our proprietary RogueRisk365® risk management program helps protect your products and people while working to free up cash flow that can be reinvested back into your growing business.
The good news is, our process is simple and straightforward. Reach out today and let us show you how.
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Technology Startup Insurance FAQ
While some insurance is necessary to meet legal and compliance requirements, here are five additional benefits for technology startups that invest in the right insurance coverage:
- Attract Investors – Quality investors do everything in their power to eliminate unnecessary risk. The right insurance program drastically reduces the chances an accident or one bad decision will sink their investment in your company.
- Stronger Relationships – Many of your vendors, suppliers and customers will demand proof of insurance in order to do business, particularly if you’re in the B2B space.
- Talent Optimization – as you grow, so does your risk exposure. Having the right coverage in place, (Workers Comp, EPLI, Fiduciary, etc), will give you peace of mind that employee related issues won't derail your business.
- Growth – as you scale so does your risk exposure. Having right coverage in place that can adapt and growth with you provides peace of mind and time to focus on scaling your business.
- Challenge – when you’re shaking up entire industries through massive innovation or even disruption people watch you very closely and something’s bound to go wrong. Whether the danger is coming from competitors, regulators or inside your own company, you’ll have a black hole of time-wasting paperwork and legal fees on your plate if you don’t have the right insurance in place.
There are five insurance policies that almost every technology startup will need at the beginning of their business:
- Business Owner's Policy - This is a package of coverages including General Liability and Property coverage.
- Workers Compensation - This covers expenses related to injured employees and mandatory in most states.
- Technology E&O - This coverage protects your business from claims related to mistakes, (errors, omissions, negligence, etc) resulting from a technology-based product.
- Cyber Insurance - Most technology startups have a massive cyber liability exposure due to the online nature of their business.
- Directors & Officers (D&O) - This insurance will provide coverage for leadership and management in the event a claim is brought against them impacting the outcome of the business.
Cost is key factor for technology startups focused on growth, (especially bootstrapping startups). Unfortunately, the "Cheapest" insurance coverage can often put the longevity and sustainability of your startup at risk by leaving major gaps in coverage. The short answer is the cost of insurance for technology startups can vary widely. The solution is to work with an insurance agent that understands your business and help you scale your coverage as you grow, making sure you only pay for what you need, when you need it.
Startup Insurance Carriers
We are very selective in the technology startup insurance carriers we choose to partner with at Rogue Risk. Not all insurance carriers are created equal. Our clients are placed with only the best insurance companies, that show up when there is a claim. Here are a few of the partner carriers we choose to place our clients with…
Common Technology Startup Insurance Coverages
Business Owner's Policy
A Business Owner's Policy (BOP) is a package of coverages, most notably General Liability and Property coverage which protect the organization from some of the fundamental risks that come with running a business. Think 3rd-party slips, trips and falls, damage to a third party’s property, products liability claims, damage to rented space, and personal or advertising injury claims are commonly included in a BOP policy.
Worker's compensation insurance is legally required in most states if you have employees and provides medical coverage to employees if they are physically injured or get sick while on the job. Additionally, worker's comp insurance protects your business against employees suing for medical expense reimbursement or lost wages.
Technology Errors & Omissions
Technology Errors & Omissions (E&O) insurance helps cover your startup from errors, omissions, negligence and product failures related to technology-based products. Common loss examples include (1) software you sold to a client had glitches that caused them to lose a month’s worth of billing data. (2) Equipment you installed prevented your customer from receiving online orders for 48 hours. (3) Your cloud-based data services failed to backup critical data that a customer cannot recreate.
Cyber Liability Insurance
Cyber liability insurance is quickly becoming as necessary an insurance policy as general liability or property coverage. The recent world pandemic, Coronavirus (COVID-19) has pushed more employees to remote work, created even more opportunities to hackers to exploit vulnerabilities in your technology. Ransomware, social engineering and illegal funds transfer associated with cyber liability claims are rapidly increasing and pushing down into small and/or startup businesses.
Directors & Officers (D&O)
Directors & Officers insurance protects your startup and its leadership from liability related to the management of the organization. Companies that indemnify their executives against covered claims can turn to their D&O policy for reimbursement. If the organization itself is named in a suit, the policy would defend the entity in addition to its leadership (executives, board of directors, etc).
Employment Practices Liability Insurance
Employment Practices Liability Insurance protects your company and its management financially from judgements against your company by employees or 3rd-parties related to allegations of harassment, discrimination, retaliation, and wrongful termination. According to researchers, three out of five employers will be sued by a prospective, current or former employee while they are in business.
Commercial umbrella coverage gives you extra liability coverage over the top of your underlying policy coverage, (such as General Liability), to help pay costs that exceed your other liability policy limits. Without this commercial umbrella coverage, you’d have to pay out of pocket for expenses that cost more than your coverage limits, such as legal fees, medical bills, and damage expenses.
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