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Best In-Class Business Insurance for Technology Firms & IT Consultants
As a business owner, there are a number of things that could occur to hurt the productivity of your business. Natural disasters can leave your company at risk in various ways, including loss of power, loss of equipment, or even loss of facility
Consider the following scenario: You have to vacate the area due to an oncoming hurricane or tornado. You return to the scene to find your equipment damaged by wind and water, or it was hurled away. Not only will you be displaced because of the damage, you don’t have the inventory you need to keep your operations going. How will you relocate to another facility, replace all your products and replace the funds needed to make this happen?
One prolonged power failure that directly affects your sales can cost you hundreds of thousands of dollars that you can’t replace. If this happened to you, how would your business survive? Having business interruption insurance in place can assist to alleviate some of those costs.
Business interruption insurance was designed to assist a property insurance policy or a package. This type of insurance has a number of advantages. You will be compensated for any income you lose if you have to abandon or vacate your building due to any damage caused by the disaster. The amount you are reimbursed based on the revenue you would have lost according to your financial statement
Without business interruption insurance, you won’t have any fail safes in place. Most standards policies for business only cover loss or damages for equipment, inventory and your structure. It does not usually cover loss of wages.
Even if there is a significant amount of money in a savings account, using all your savings to recoup your losses does not make good business sense. If you have to use all your savings to keep the business open, if another disaster occurs, you won’t have any resources to fall back on.
The amount of coverage you need will depend on your activities and the area in which your business resides. If you live in an area where natural disasters are high, you may need a larger policy to cover your business expenses after a disaster occurs. There are other factors to consider when making this decision, including:
Because this is a policy that works in conjunction with your other business policy, knowing the answers to these questions is key in obtaining a policy that would work well for you. No one likes to think about their business being in jeopardy due to an unforeseen circumstance, but being prepared whether you use the insurance or not should give you some relief in knowing your business will be covered.
You can never estimate the time it will take to recover your operations once a natural disaster has taken place. Your policy limits should cover a certain period of time to ensure you stay open.
Business interruption insurance policies are as comprehensive as you need them to be. Most policies will cover your utility bills and can even cover your payroll expenses while you are getting things in order. When determining your needs, it is best to work with a qualified insurance professional to find out additional options that may fit your needs.
Remember: It’s always better to overprotect your investment than not protecting it at all!
If you have either worked as an independent contractor or have subcontracted work out, it’s best to get a solid understanding about the contract requirements. For the most part, these are all self-explanatory and make sense, however, the insurance aspects of an independent contractor agreement can still be challenging. The terminology and ultimate reasons behind these requirements can be a mystery to you if your training is in another industry that isn’t insurance or law, but ultimately this part of your contract is as vital as any other.
Whether someone is an employee or a subcontracted hire, their presence creates a liability situation. While workman’s compensation insurance may not strictly be required of the company for an independent contractor, they may still lawfully sue the company if they are injured. As well, if they make a mistake or omit something that results in data loss, physical damage to the property, or injury to someone hired by the company, the company has the right to take action against them.
When you are working for a company, you are known as the vendor. Vendors must maintain a level of liability coverage that is either set forth in the independent contractor agreement, or what makes sense. You need to use insurance from a company that has an excellent level of financial strength as measured by the A.M. Best Company. This way, if underwriting requirements under the law change or the economy undergoes a substantial issue such as a deep recession, the insurance company will still have a high likelihood of meeting its policy requirements. After all, if the insurance company goes broke, your policy stops being useful.
Contracted employees waive what’s called the right of subrogation, meaning they cannot make up for losses due to their own errors or mistakes from the company they are working with. Their insurance policy does not provide them with protection from their own errors and mistakes, which is much of the reason why the independent contractor agreement stipulates having insurance in the first place. Your contract should also say that the vendor is prohibited from attempting to file an insurance claim against the company for any issues that they (the vendor) caused.
One important aspect of any effective insurance policy is that it needs to have at least a 30-day notice if the policy needs to be cancelled or renewed. If a contractor attempts to obtain a policy to start work and allow the policy to lapse, the insurance company is required to issue notice to the company they are working with so the company will know to warn them of the consequences of not having a policy in effect. If the policy lapses, the company will have carte blanche to terminate the agreement, and may even have the right to stop the vendor from entering the premises. Naturally, this part of the independent contractor agreement could stop them from performing your duties and be a quick de facto termination of your agreement.
On some occasions, the independent contractor may require assistance in their operations. This is naturally up to the business and may involve other parts of your contract. However, one constant you need to be aware of is that subcontractors, employees, and anyone else a company brings in to work must also have insurance equal to what the vendor has. If they do not, this can result in stopping work because everyone brought in can create equal liability.
There are numerous ways independent contractors can cause civil liability when they work with a company. That’s why it’s beneficial to have worker’s compensation, general liability coverage, automobile liability coverage, and errors and omissions coverage all ironed out.
Particularly in the IT industry, an independent contractor may be in charge of handling billions of dollars worth of information, so the business should invest in cyber liability coverage. Additionally, an umbrella or excess liability policy is useful for occasions when your standard policies do not cover the full amount of damages wrought. A catastrophic situation can literally make or break a mid-size business, and you could be responsible for such an occurrence.
Insurance is vital to working as, as well as hiring, an independent contractor. You present serious potential risks to a company that can be properly mitigated this way.
Taking a business trip? Going on-site with a client? Sending an employee to pick up office supplies? If your business ever requires you or your employees to travel in a vehicle that is not owned by your company, it’s imperative that you learn about hired and non-owned auto liability.
In a nutshell, hired and non-owned auto liability is a type of insurance that covers accidents involving a vehicle that—as the name suggests—is either rented or not owned by your company. Depending on the nature of your business, this can range from a trip to go pick up lunch to frequent, long-distance trips to a client’s office.
Many of our clients have contracts that require hired and non-owned auto coverage. Yet despite how common this coverage is, there is much confusion about what it actually insures.
Let’s first break down the difference between hired and non-owned vehicles, as there are a number of situations that make require you or your employees to travel using one or both.
Vehicles owned by your company are a different story, but many businesses either cannot afford or have no regular need to purchase company-owned vehicles (and the insurance that goes with it). In that case, you may find yourself needing to rent a vehicle, hire a taxi or limo, or ask one of your employees to use their own vehicle.
Perhaps the most important thing to know is what hired and non-owned auto liability does and does not cover.
If an employee of your company is driving to a work-related event in their personal vehicle or a rented car and has an accident, their insurance may not be enough to cover the claim. In this case, your company can be held responsible for damages. As mentioned above, this only covers liability claims against the business itself. It does not cover physical damage to the vehicle or any property that may have been transported therein.
If an employee gets into an accident and they are deemed at-fault, they can be sued as an individual and your business can be sued separately. That’s where hired and non-owned auto liability kicks in to protect your company. The employee should still have their own insurance policy that covers them for liability and physical damage. If the vehicle is rented, we strongly advise purchasing optional liability and collision insurance from the rental company.
Hired and non-owned auto coverage can be added to most general liability policies for a small increase in premium. When compared to the potentially catastrophic financial effect a lawsuit could have on your business, it’s absolutely worth it. And for small companies, sometimes there is no additional cost at all!
The bottom line is this: If you have employees using their personal vehicles for work-related purposes you should absolutely have this coverage in place. It will keep you at ease and prevent legal headaches down the road—no pun intended!
Errors and omissions insurance. Doesn’t sound very exciting, does it? Not exciting, that is, until you need it. Or, worse, until you need it only to find you don’t have it.
If that happens to you or your company, you’ll probably experience more excitement than you can stand. Although this type of insurance has been around for several decades, many risk managers and independent contractors alike are still unsure of what errors and omissions insurance does (and does not) cover, or if it’s something their business needs.
Much of the focus on errors and omissions (commonly referred to as “E&O”) insurance has centered on the tech industry, and for good reason. Our world doesn’t so much revolve around technology as it revolves because of it. If you’re in the tech industry, you already know how true this is. Even if you’re not, however, you probably don’t need to think too hard to come up with examples of how important technology (IT, social media marketing, your manufacturing machinery, data storage, etc.) is to your enterprise.
With luck, you’ll never discover how costly a tech failure can be and how it can threaten the very survival of your business and if you have errors and omissions insurance coverage, you may never have to.
Here are some of the important things you need to know about errors and omissions insurance coverage:
If you’re an independent software developer or programmer, you would be foolish not to obtain errors and omissions coverage. Not to be dramatic, but one claim could wipe you out.
Even if your work is performed entirely as an independent contractor under another entity, a plaintiff will probably sue everyone involved and let the court sort out the party ultimately responsible.
Errors and omissions coverage applies to the performance of your employees and independent contractors, your software and your hardware (for example, if you provide off-site storage on your servers).
It is applied to loss caused by a wide variety of factors, the most common of which are:
If one of your products is defective to the extent that it requires a market-wide recall, you’ll be glad that you have a product recall endorsement or separate policy.
If a company product fails to perform as designed/promised resulting in loss to your customer, you can be fairly certain that the customer will be coming after you for recovery.
Perhaps the harm to your client was the result of a simple programming or data entry error by one of your employees. Or, maybe a member of your staff incorrectly trained your customer/client on how to implement or use your latest software update. The loss might be caused because a contractor you hired cut corners when installing a new program. Regardless of the reason, errors and omission insurance coverage can protect you from what could be catastrophic financial loss.
In an effort to succeed, we all aim to please. Unfortunately, in doing so, many of us will offer what we think the client wants to hear, regardless of whether or not we can deliver the product, service or level of performance promised. If what the client receives isn’t what they expected, you can be pretty well assured that they will sue you.
NOTE: You can usually avoid this outcome if your business takes the time to train personnel on how to manage your customers’ expectations. Managing expectations reduces the risk of disappointment.
Errors and omissions insurance does not cover:
When shopping for errors and omissions insurance coverage, consider the following before deciding on a provider:
There are other need-to-know details about errors and omissions insurance coverage and why you need it. You may be tempted, in the interests of reducing costs, to operate your business without it. We highly recommend you don’t. A comprehensive errors and omissions policy can provide protection against potential catastrophic loss even a single incident can cause. Is short-term cost savings worth the risk of significant long-term damage to your enterprise? If you’re involved with the risk management of your company, you know the answer to that question. You owe it to your business (not to mention your own peace of mind) to speak to a qualified insurance professional about what errors and omissions insurance coverage is right for you.
Owning a business is an exciting and rewarding achievement. However, it also comes with its share of liabilities. While being sued as a business owner is relatively rare, every business is at risk. Not having adequate coverage for your business can leave you susceptible to a wide range of legal and financial issues, up to and including bankruptcy and the loss of your business.
Here are five reasons you need business insurance:
The only thing that stands between your business running smoothly for years and it coming under fire of a lawsuit is one unfortunate event. Whether it’s an employee who gets angry because you had to let them go, a customer who slips and falls on your floor resulting in costly medical expenses, or a single omission in a business contract, it only takes a single event to cause serious damage to your legal and financial wellbeing. Various forms of business liability insurance can help you protect your business.
Even though you take every measure possible to protect your business, your employees, and your customers, life is unpredictable, and things happen that you’d never expect. Being prepared for the unexpected with business liability insurance can help you operate your business with peace of mind instead of walking on eggshells hoping nothing happens.
Many business owners fall into the trap of believing that their personal and business assets are safe and covered because they’re using a “corporate shield” type of policy. Unfortunately, the protection of a corporate shield only goes so far, and it doesn’t protect your business against every type of judgment a court could issue against you. Not only could you lose your business, but you could lose your personal assets as well. Losing everything you own is not a risk you need to take; business liability insurance can help you stay protected.
You might think that because you have general liability insurance, you’re covered for any issue that might arise. However, that coverage doesn’t help you if your employees are injured at work. Home-based business owners often believe that their homeowners insurance covers their business affairs, too, but it doesn’t. Likewise, property damage costs aren’t always included in policies like commercial liability. No matter what policy you have, it’s unlikely that a single business policy will cover everything you need to protect. Multi-policy business insurance coverage can help you protect your business, employees, and customers at every level.
If you’re looking into business insurance, you might be wondering where to start. There are many types of business insurance available, and each of them serves a purpose. However, the basic types of insurance every business owner should usually have include a business owner’s policy (general liability), workers compensation, errors and omissions (E&O), and something to cover your personal assets in the case of a lawsuit. While you’ll only be able to determine the best combination of policies by soliciting advice from an insurance professional who can look at your unique circumstances, these are the standard policies that most businesses need.
Regardless of the combination of policies you choose, you want to make sure that your business assets, your employees, your customers, and your personal assets are covered. You also want protection from mistakes made on paper so that you won’t lose money or assets over a small mistake on a contract. A small investment in business coverage today can mean avoiding costly lawsuits later.
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