What is Technology Insurance and Why Your Tech Business Needs It

Your technology business is under attack from competitors, those who would seek to steal valuable data, and even from a litigious society looking to blame anyone who may have harmed them, real or imagined. 

You are likely to take steps to prevent and minimize damage from these threats. You monitor competitors, invest in digital security measures, and have key employees agree to NDAs and non-compete agreements. You may have even carefully crafted terms of service agreement(s) that you hope will offer some protection. 

But there is an even more encompassing step you can take to protect your technology business from threats: investigating the value of insurance policies for a technology company. Insurance for technology companies is next-generation business insurance designed specifically for companies in the tech industry. Just as your tech company has advanced, technology insurance has evolved to protect your unique assets and minimize your risks from growing threats.

So, what is technology insurance for a tech company and what does it cover? How is it different from standard business and liability insurance, and how can a tech company liability insurance policy help protect your business?

Before you say “no,” you should know why owners of tech companies should seriously consider the acquisition of technology insurance. It is the next level of coverage for technology-based companies.

What is Technology Insurance?

Technology insurance is specifically designed to enhance current property, liability, and even auto insurance policies for technology-based companies. These companies have risks that can reach far beyond those of traditional retail or service industries. Technology insurance is designed for a world where information, data, speed, access, and convenience are currency. It is created for businesses that innovate ahead of the curve and require loss prevention products that keep up the pace.

The loss of business, reputational damage, and even liability claims that can result from a breach of customer data can be devastating. The loss of the data on a stolen laptop simply can't be replaced with a new device. Technology companies need insurance protection specific to their requirements and risks. This is where technology insurance is vital.

What Does Technology Insurance Cover?

Insurance policies for a technology company can cover a wide range of losses. These can include:

• Loss of data and audio and visual information.
• Loss of electronic and computer equipment.
• Consequential loss to stock and selling price valuation.
• Contractual penalties.
• Coverage for electronic data destroyed or corrupted by a computer virus or harmful code.
• Loss of business income due to a denial of service attack.
• Worldwide coverage for laptops, personal property, property in transit, and business income from dependent properties.

In addition, coverage can be provided to cover service interruptions and damage from utility interruptions including spoilage.

Tech company insurance may also include several other valuable features and coverage, like technology errors and omissions, equipment breakdowns, identity recovery, product recall expenses, umbrella coverage, and more. 

Why Tech Business Owners Should Obtain This Coverage

Tech companies can be big targets for a variety of reasons. Defending your reputation, assets, and brand can be extremely expensive in terms of legal costs. Technology insurance can pay the legal costs to defend you, whether the claims are valid or not. It can help pay for any judgments or settlements that may occur as the result of a claim. 

This alone is a significant reason tech companies should acquire technology insurance. Remember, the cost of a legal defense against a claim can push a company towards insolvency or bankruptcy. It may not be fair, but it can happen.

When your tech company has technology insurance, you are demonstrating to stakeholders, ranging from employees to investors, that you are taking responsible steps to protect your company. It shows you understand the unique risks technology companies face and have moved to act responsibly.

It Shows You Understand the Value of Your Reputation

Technology companies operate in unique circumstances that place a high value on efficiency, speed, effectiveness, and connectivity. These are fragile intangibles that require unique protection. Technology insurance can help facilitate that.

Frequently Asked Questions about Technology Insurance

What are Technology Companies?

Tech companies are electronics and/or digitally-based companies. They can include internet-related services, including e-commerce, web development, software, digital storage, and more.

Is Technology Insurance Necessary for Tech Startup Companies?

While there are no requirements for insurance for a tech company, general liability is considered essential for startups in helping to cover the cost of lawsuits should a client be harmed.

Can a Tech Start-Up Afford Technology Insurance?

Many small tech startups can secure tech insurance, including general liability coverage for less than $750 annually (less than $65 a month).

What is Technology Professional Liability Coverage?

This is often referred to as errors and omissions coverage and, in the medical profession, malpractice. It covers mistakes and negligence by a technology company and the services it provides. It is not included in general liability insurance.

How Does Tech Liability Insurance Differ from Cyber Liability Insurance?

Cyber liability insurance can cover the ramifications of a data breach or other similar incidents for a technology company. Technology E&O liability insurance responds to failures due to errors and omissions in a tech company's products or services.

Where Do You Go From Here?

Technology insurance is a relatively new form of insurance created to meet the needs and risks of the growing technology segment. There are unique aspects of technology companies that are underserved by the general business and general liability policies. Because it is a relatively new loss prevention product, not all carriers offer it. What's more, fewer companies place a focus on it.

We encourage you to perform your due diligence. Learn more about technology insurance and how it can provide better coverage and improve peace of mind.

You work hard to keep your technology company ahead of the curve. You deserve business insurance that can keep up as well. Technology insurance can do that.