IT insurance is a collection of insurance coverages needed by consultants and businesses focused on delivering technology, computer, or IT services to protect against third-party liability claims. The two main tech insurance coverage types are professional liability and general liability insurance. The average cost of IT insurance ranges between $650 and $1,300 per year.
The Hartford has a team of experts to help you decipher what your exact technology insurance needs are, and they’ll help you get covered without overpaying. Get your free, no obligation quote in minutes.
Top IT Insurance Providers
|The Hartford||The Hartford is best for a combination of high-quality customer service and specialized insurance packages for small businesses.|
|Insureon||Businesses wanting to quickly receive quotes from multiple tech insurance providers.|
|Hiscox||Businesses that would prefer a quick and easy-to-use website when applying instead of working with an agent.|
|Travelers||Travelers is best for business owners wanting to work with a nationwide provider with extensive knowledge of the IT industry.|
|Insurance321||Insurance321 allows businesses to get multiple quotes for free and with no obligation ensuring they find the right policy at a great price.|
How IT Insurance Works
IT insurance is not a specific type of insurance but rather a collection of insurance types that technology professionals need to cover risks for their business. Those needing tech insurance include IT consultants, software development firms, technology repair businesses, and more. The greatest risk for which IT professionals need insurance protection is damage to a customer, such as a data breach or a server crash.
The most common type of IT insurance is professional liability, which will protect you from mistakes you make that harm your clients. IT professionals who work directly with the public, either out of an office or on location, will also likely need commercial general liability (CGL) insurance and commercial property insurance. CGL protects against third-party claims arising from bodily injury, property damage or related lawsuits. Property insurance covers the assets of your business, such as your building, its contents, and the technology used in your business.
A common policy type used by small business owners, including technology service professionals, is a business owners policy (BOP), which bundles multiple coverage types into one policy. Basically, all the tech insurance IT professionals need, including general liability, commercial property insurance, and professional liability insurance, can be included in a BOP. A standard BOP typically includes general liability insurance and commercial property insurance.
IT Business Insurance Cost
The average cost of IT insurance ranges from $650 to $1,300 per year. The cost of tech insurance depends primarily upon the types and number of policies needed. Most small business technology firms need just one or two policies, which are most often professional liability (E&O insurance) and commercial general liability (CGL).
|Professional Liability (E&O Insurance)|
|Commercial General Liability|
|Commercial Property Insurance|
|Cyber Liability Insurance|
|Commercial Umbrella Insurance|
The basic tech insurance types needed by technology professionals can be bundled into a business owners policy (BOP). These tech insurance types include professional liability, general liability, commercial property, and cyber liability coverage types.
According to research by Insureon, 53 percent of IT firms buy just one policy, which is most often a BOP. For these businesses, the average cost of IT insurance is $650 per year. Businesses that buy two policies usually get some combination of general liability, professional liability insurance, and workers compensation. For these businesses, the average cost of IT insurance is $1,300 per year.
Top Tech Insurance Providers
When searching for the best tech insurance providers, technology professionals should consider only the insurers that can provide the major types of tech insurance needed, such as professional liability (E&O Insurance), general liability, commercial property insurance and cyber liability coverage.
Here are four of the top providers that offer the main types of tech insurance you need:
The Hartford is a large insurance provider that caters to the needs of small business owners. They offer the primary types of IT insurance coverage, including general liability, property insurance, and business interruption insurance. The Hartford is also highly rated for customer care and claims service. The Hartford is a good provider for IT professionals because they offer protection specialized to technology professionals.
Insureon is one of the best online insurance providers that specialize in serving small business owners. To build their insurance packages, they partner with large, highly rated insurance carriers, such as The Hartford, Hiscox, and Travelers, to get the best coverage at competitive pricing. Insureon is a good match for IT professionals who want an online broker who can shop various carriers for them, rather than getting multiple quotes from different agents.
Hiscox does a good job of balancing simplicity with specialization, and this suits the needs of many IT businesses. Hiscox is a large, highly rated provider that has been writing policies in the U.S. for decades. New clients can apply through a user-friendly website or call for personal service. Hiscox can be the best provider for IT business owners who want a national provider with a simple online approach.
Travelers has a long history of providing insurance solutions to businesses, including the tech industry. Their insurance products for small business owners, including the tech and IT industries, are customized to fit the unique needs of the business. For example, Travelers offers primary coverage types like general liability, but also specific coverage types like their Cyberfirst coverage that includes errors and omissions and more.
Insurance321 is an online insurance marketplace that helps small business owners shop for insurance policy solutions. Insurance321 is a good match for small business owners who want simple, yet complete coverage for the tech industry. Receive multiple insurance quotes in as little as four minutes, and get affordable coverage to protect your business. Their no obligation process lets you pick the right insurance solution tailored for your business.
Tips on Applying for IT Insurance
When you apply for insurance for IT and technology professionals, it’s important to do some homework before making your final selection. For example, you’ll need to understand your greatest risk exposures, which will primarily arise out of the nature of your work and the types of clients you work with. From there, be sure to get multiple quotes and you’ll be ready to apply.
Here are things you need to know before and during the IT insurance application process:
1. Know the Risk Exposures Tech Insurance Needs to Cover
Most insurance applications will begin by asking basic questions, some of which you’ll know, such as the name and location of your business. However, some questions you may not know how to answer, such as the types of IT insurance you need. To gain a basic understanding of insurance types you’ll need to apply for, identify your primary risk exposures.
Risk exposures to help determine which types of IT insurance you’ll need include:
- Working with the Public: If you have an office that’s open to the public or you work on your clients’ premises, you have risks that need coverage with general liability insurance.
- You Own Valuable Assets: If your business owns a building or you have tools and gear that are expensive to replace, you may need to apply for commercial property insurance.
- A Mistake Can Do Financial Harm to a Client: If your clients rely on your IT work to help keep their business running, you’ll need professional liability insurance to protect against errors you may make.
- If You Have Employees: Most states require workers compensation if you have one or more employees.
When completing your application or getting a quote, you’ll know how to request the appropriate coverage types if you understand your fundamental risk exposures.
2. Get Multiple Quotes for Technology Insurance
Whether you get quotes online, over the phone, or in person with an agent or broker, it’s wise to get at least three quotes. This way, you can compare and contrast providers, which will help you learn more about the coverage you need, the best pricing on a policy, and ultimately the final choice of provider.
3. Select Technology Insurance Company and Apply
After getting multiple quotes, you’ll be able to recognize which provider will best suit your needs. The provider should have a good understanding of the IT industry and how to best protect against your greatest risk exposures. When you complete your final application, be sure not leave out any information that can cause you to be underinsured.
Common Types of IT Insurance
|Professional Liability (E&O Insurance)||Cost of damages due to your mistakes or negligence.|
|Commercial General Liability||Third-party claims for bodily injury, property damage, medical payments and personal or advertising injury.|
|Commercial Property Insurance||Owned real estate and other assets you use in your work for clients such as computer hardware and tools you use in your work for clients.|
|Cyber Liability Insurance||Often included in professional liability insurance, this covers your business and your client’s business losses due to data breach or cyber attack.|
Most IT firms can cover their primary risks with one or two insurance types, which are typically commercial general liability and professional liability (E&O insurance). If your IT business operates out of an office, you’ll also need commercial property insurance. All three of these coverage types are often bundled into one cost-effective business owners policy (BOP).
1. Commercial General Liability
Commercial general liability (CGL) insurance covers non-employee bodily injury, property damage, and related legal costs. CGL can also help cover certain claims of slander and libel against your technology business. However, CGL does not cover liability claims directly arising from the services you provide.
For example, let’s say you are working on location at your client’s office. While working, you accidentally bump into an expensive piece of art and it smashes into pieces on the ground. Your CGL policy would cover you for the cost of damage.
2. Professional Liability Insurance
Professional liability insurance helps cover the costs of liability claims customers may make against your technology business for damage caused by your mistakes or negligence. Professional liability insurance is often called Errors and Omissions (E&O) insurance, and it protects small businesses from errors in judgment they might make on the job. This is important coverage for IT consultants and is not the same as commercial general liability.
For example, if your client’s server crashes due to your negligence, causing them to lose data and valuable work time, and they sue you for damages, your E&O insurance can help cover the legal costs, even if you are not responsible for the crash.
3. Commercial Property Insurance
If you have an IT firm that works out of one primary location, commercial property insurance is needed to cover the building and other assets, such as computers, tools and equipment you use, and office furniture. This coverage protects against losses due to fire, theft, vandalism, and extreme weather. Most IT firms add commercial property insurance to a BOP, rather than buying standalone coverage.
For example, theft is a top risk exposure for small businesses, and your gear is not only expensive but crucial to the ongoing success of your work. Commercial property insurance will help cover the cost of replacing stolen items from your premises or your client’s location.
4. Cyber Liability & Data Breach Insurance
Cyber liability insurance covers losses resulting from cyberattacks or data breaches, and this coverage may be needed in addition to professional liability insurance. Cyber liability protects against data loss and restoration, extortion, legal fees, and more. Since many IT firms work directly with their customers’ data bases, cyberattacks and data breaches are real risk exposures.
For example, if your client suffers a cyberattack, a data breach, or server crash, they may blame you, although the damage may be a result of something else, such as outdated technology.
Tech businesses that potentially need IT insurance are numerous and include:
- IT Services
- Software Developers
- Systems Analysis
- Database Administration
- Hosting Services
- Technology Consulting
- Integration Specialists
- IT Project Managers
- Online Security Specialists
- System Designers
- Website Developers
- Application Service Providers
- Hardware Manufacturing
- Hardware Installation
Small businesses should not overlook cybersecurity risks, according to Jeff Somers, President of Insureon:
“Facing risks is inevitable as a budding IT entrepreneur, especially if you are the sole proprietor of your business. If you’re sued by an angry client, your personal assets (car, home, savings, etc.) could be seized. One major threat facing tech business owners today is cybersecurity issues. A joint Insureon-Manta poll found that 82 percent of small business owners don’t think they are at risk of experiencing a data breach, but the reality is that hackers can compromise your systems at any time.”
Other Types of Tech Insurance You May Need
Depending upon the size of your IT firm, you may need additional insurance on top of the primary IT insurance coverage types. For example, you may need additional liability protection for cyberattacks and data breach. And if you have employees, most states will require workers compensation protection.
Here are two additional insurance types IT businesses may need:
1. Workers Compensation
For IT consulting firms with employees, workers compensation is required coverage in most states. Workers compensation insurance provides benefits to your employees in the event of work-related injuries or illnesses. The cost of workers compensation ranges from $350 to $650 per month for most IT firms.
For example, if an employee has a light or ceiling tile fall on him while installing networking cable and it knocks him off of his ladder, workers compensation can cover medical bills, wages from lost work time, and more.
2. Umbrella Insurance
Commercial umbrella insurance, sometimes called excess liability insurance, extends coverage on certain liability insurance policies when their limit has been surpassed. Another benefit of umbrella insurance is that it can offer millions in extra coverage at lower rates than increasing the underlying coverage limits. Umbrella coverage may be right for large firms in high-risk industries.
For example, if your IT firm has a $1.2 million general liability claim and your policy only covers $1 million, your umbrella coverage can pay the remaining $200,000 toward the claim. It’s important to note that umbrella insurance can’t be applied toward your professional liability (E&O) insurance.
Who Needs IT Insurance
If you are an IT professional, whether you are an independent consultant or a firm with employees, you have risk exposures that need protecting with insurance. Your need for insurance is not a matter of if you need it but what types you need. It’s important to consider where your risk exposures are so that you can get the coverage you need before you start working for clients.
For example, if there is a risk that your mistake or negligence can cause financial damage to a client, you’ll need professional liability insurance. And if you work directly with the public, either on your premises or at a client’s location, you’ll need general liability insurance. Most tech professionals will get all of the coverage they need from a BOP, where you can get general liability, property, and professional liability in a single policy for one monthly cost.
Small business insurance is a necessity for the technology industry because of the many unique risks that professionals in the tech industry face every day. Data breaches, software errors, and programming mistakes can lead to costly lawsuits. Therefore, finding the right tech insurance is an integral part of business success.
The experts at The Hartford will help you identify the right type of tech insurance for you, so you can get covered for your specific needs. Get started today with a free, no obligation quote.