Insurance for Tech Startups—What To Look For

//Insurance for Tech Startups—What To Look For

Liability Insurance for Tech Startups

Liability Insurance (also referred to as Errors & Omissions Insurance) is an important policy that may cover costs that you incur in the case where you make a mistake while delivering a service, failing to deliver on what you promised to do or failing to deliver at all.

In essence, this type of insurance protection responds to any claims that arise from acts of negligence.

First Thing’s First—What’s a Tech Startup?

A tech startup is a company whose focus and purpose is to bring technology products or services from ideation to market. Tech startups typically deliver new technology products or services to market or existing technology products or services in innovative ways.

Why Does a Tech Startup Require Liability Insurance?

Liability Insurance is intended to help protect tech startups because they offer professional advice and services to individuals and companies, bearing the full cost of defending against a negligence claim made by a client (should they decide to file a lawsuit against you).
This type of insurance coverage focuses on alleged failure to perform on the part of, financial loss caused by, an error or omission in the service or product sold by the policyholder.

So when is the best time to get liability insurance for your startup? The moment that your tech startup goes into beta or live, you’ll require liability insurance. Think about it … it’s like getting any other type of insurance—think of personal auto insurance. If you purchased a car today, you’d need your auto insurance to be active the moment you put your key into the ignition.

Looking for  liability insurance to protect your startup? Get your FREE quote online

At Zensurance, we make getting a commercial business  insurance quote easy. Our hassle-free, easy to use and no-jargon tool walks you through the entire process. 

What Is Covered Under  Liability Insurance for Tech Startups?

Most liability insurance policies cover economic (financial losses) which are suffered by third-parties. This type of coverage is meant to protect you by covering the costs that are associated with any errors in the services that you have provided to your clients and customers. Along with tech startups, this also applies to consultants, lawyers, accountants, brokers and financial advisors.

The most common exclusions in coverage for a liability police are:

  • Bodily Injury (BI) and;
  • Property Damage (PD)

The above are covered by Commercial General Liability (CGL).

What Is Not Covered Under Liability Insurance for Tech Startups?

To fully protect your tech startup, you’ll need to consider some other common policies. Here’s a list of additional protection policies that tech startups typically bundle with their liability insurance: 

  • Commercial General Liability Insurance (CGL)
    This is the foundational liability insurance that any business should own at minimum. It coverts third-party lawsuits (bodily injury and property damage). (e.g. You meet a client in their home, slip and fall on something on their property and hurt yourself).
  • Business Interruption 
    If you rent an office for your business and a flood destroys your work space, business interruption insurance may cover the costs associated with loss of income due to operations put to a halt.
  • Cyber Insurance
    If your customer information is compromised and their personal information is used against them (e.g. fraud activity where their I.D. is used), your customer can sue you for the cost of the damages associated. The added protection is a smart move, especially since the number of cyber attacks continue to grow, costing businesses lucrative amounts of money.
  • Directors & Officers Insurance (D&O)
    Directors & Officers Insurance protects your company against “wrongful acts” such as errors, omissions, breach of duty, neglect and misleading statements made on behalf of the company.
  • Legal Expense Insurance
    This type of insurance policy may cover legal costs allotted to defend your legal rights. This is especially targeted toward some claims relating to employment disputes, legal defence, contract disputes & debt recovery, statutory license protection, property protection, bodily injury and tax protection. (e.g. a former employee files a lawsuit against your company for wrongful dismissal. This policy will cover the cost of legal expenses).
  • Property Insurance
    Any property that you own which is used for your business which is damaged or stolen may be covered. (e.g. You have a company laptop that was stolen when someone broke into your vehicle).
  • Contents Insurance
    This may cover the damage to, or loss of, your company assets and possessions. (e.g. Your work jacket was stolen—it was left in the back of your commercial truck, which was stolen).

If you’d like to know how to bundle your insurance protection to protect your startup, call us at +1-888-654-6030 and one of our licensed Insurance Advisors would be happy to answer any questions you have. 

At Zensurance, we make getting a commercial business  insurance quote easy. Our hassle-free, easy to use and no-jargon tool walks you through the entire process. 

How Much Does Liability Insurance For Tech Startups Cost?

The cost of owning liability insurance as a tech startup will depend on a number of factors. Typically, premiums (what you pay for your insurance) are based on various factors including your company’s gross revenue, founder resumes and financials.

What Kind of Information Do I Need To Get a Quote For Liability Insurance?

Tech startups require professional liability insurance—let Zensurance help you find the right kind!

Tech startups need liability insurance—Zensurance help you find the right kind!

Some wise advice? To save yourself some time, it’s is a good idea to do some digging and gather some pertinent business information about you or the your company before requesting a quote.

Another great idea is to put together a list of questions beforehand so that you don’t forget what to ask once you get to speak to a broker about your options for liability insurance coverage. Think about the possible risks that you or your company can face when operating your business.

Here’s a list of several types of information about your business that you’ll need to gather in preparation for your search:

  • Name of your company
  • Address (and locations if applicable)
  • Revenue—this is a driving factor for your policy premium
  • Your company structure—(i.e. sole proprietorship, corporation, partnership, joint venture or franchise?)
  • The date that your company was established
  • Is your company registered in Canada?
  • What is the number of employees working for your company?
  • Do your employ subcontractors?
  • Privacy—do you collect private information (e.g. customer data, financial information). What measures do you take to protect this information?

Having this information will make requesting a quote easy and fast—whether it’s online, over the phone or in person, and will likely prompt more questions to ask!

If you’re ready to get a free quote online, Zensurance is making it easy for business owners to get a quote in under 5 minutes!

Looking for liability insurance to protect your tech startup? Get your FREE quote online

At Zensurance, we make getting a commercial business  insurance quote easy. Our hassle-free, easy to use and no-jargon tool walks you through the entire process. 

A Recap of What You’ve Learned About Liability Insurance for Tech Startups

  • Liability Insurance (also referred to as Errors & Omissions Insurance) is an important policy that may cover costs that you incur in the case where you make a mistake while delivering a service, failing to deliver on what you promised to do or failing to deliver at all.
  • Liability insurance coverage focuses on alleged failure to perform on the part of, financial loss caused by, an error or omission in the service or product sold by the policyholder.
  • Wondering when you need to get it? The moment your tech startup goes into beta or live, you’ll require liability insurance.
  • Most liability insurance policies cover economic (financial losses) which are suffered by third-parties.
  • The most common exclusions in liability insurance policyare:
    • Bodily Injury (BI)
    • Property Damage (PD) and;
    • Intentional/Dishonest acts.
  • Be prepared! When you research quotes and are trying to find liability insurance for your startup, it’s always smart to gather your business information beforehand. You’ll save time and will be making it easier for you and the insurance provider.
  • The cost of liability insurance for tech startups will depend on a number of factors, including your company’s gross revenue, founder resumes and financials.
  • To fully protect your tech startup, you’ll need to consider some other common policies. Some of the other common policies that tech startups should consider are Commercial General Liability Insurance (CGL), Business Interruption Insurance, Cyber Insurance, Directors & Officers (D&O) Insurance, Legal Expense Insurance, Property Insurance and Contents Insurance. 
  • Finding liability insurance for your tech startup isn’t the hard part. Ask questions when you’re speaking to a licensed broker to see if they’re a good fit for you. Do they answer your questions clearly and explain insurance terminology to you in a way that’s easy to understand? Are they available when you need them to be? Ask about the claim process, whether claims can be submitted online or if you’ll need to mail forms out. Is there a digital dashboard that you’ll be provided to view your policy? If you purchased multiple policies, are there any available discounts? Will you have a dedicated licensed broker assigned to your business? Make sure to make a list of questions to ask so that you can address them without forgetting.

A List of Resources for Tech Startups in Canada 

As a thriving tech startup, you understand the importance of having a wealth of information at your fingertips. Below we’ve listed some very valuable resources that you could bookmark. We hope you take advantage of these links. If you think something might be missing or would like to suggest anything, we’re all ears! Send them to content@zensurance.com.

Associations 

  • CABI (Canadian Accelerations and Business Incubation)
  • FINACAN (Financial Innovation & Technology Association of Canada)

Accelerators, Incubators & Startup Communities 

Events & Conferences 


Education & Training 

Co-working Spaces 

Research & Insights 

News & Media 

Recruitment, HR and Benefits Tools 

Looking for liability insurance to protect your tech startup? Get your FREE quote online

At Zensurance, we’re making commercial business insurance easy. Our hassle-free, easy to use and no-jargon tool walks you through the entire process. You could walk away with an estimated quote in under 5 minutes! 

By |2018-07-31T13:09:06+00:00June 21st, 2018|Business|0 Comments