How to Purchase Business Insurance for the Specific Needs of an IT Company

Today’s high tech businesses have insurance needs that were impossible to foresee a generation ago, when Internet insurance was unheard of and even inconceivable. The liability risks for an IT firm are particularly complex. Having property coverage for your equipment is standard procedure for a business, but what if your equipment is a computer network? You still have to protect yourself against fire and storm damage as well as theft, but you also need to consider the potential for loss due to a hacker intrusion or from a computer virus. Can an Internet insurance agent or broker supply the kind of specialized insurance you need? Will you want to purchase a general business insurance policy? Or would it be better to employ a more piecemeal approach in order to provide for your specific situation? If you are responsible for an IT company, your property insurance and general liability insurance need to cover less tangible losses than destruction of heavy machinery or the disappearance of office supplies. While these sorts of incidents must still be taken into account, you must also consider your potential for loss if data is deleted from your databases. What if an employee maliciously alters a partner’s computer data, for example?

Fortunately, most insurance companies understand that data can be as vital to your firm as physical assets. Those situations are relatively easy to factor into your risk management strategy compared to the possible losses that may arise due to unforeseen results of your IT products. To account for that category of risk, you’ll need to look into professional insurance, also known as errors and omissions insurance. Professional insurance insulates you and your business from devastating losses connected to claims of negligence or failure to adequately carry out professional services. For an IT company, professional insurance is a lifeline that can keep you afloat when faced with malpractice or breach of contract litigation.

While you can buy your insurance a-la-carte, a little Internet insurance shopping will make that unnecessary. Most major insurance carriers bundle property, general liability, and professional insurance into one BOP (Business Owner’s Policy) package and have customized it for the IT industry. You will still need to determine the coverage limits necessary for your business, and some parts may be optional, but the basics will be laid out for you. These IT BOPs will have all the general coverage you should expect from a business policy, plus:

• Property insurance – Covers income loss due to website failure and data corruption from computer viruses and hacker attacks.
• Personal and advertising injury liability insurance – Extends your liability coverage to include your website.
• Professional insurance – Covers loss in the event your product allows unauthorized access to clients systems, including computer viruses, as well as other security breaches. Unlike most professional insurance policies, the coverage area includes the entire world.

Unless your firm is large enough to employ a risk management expert, a BOP will be the easiest and most cost effective way to get the insurance you need.

James Cochran, owner of Techinsurance.com, is a web-based small business insurance agent specializing in the IT industry. Over 15 years of insurance experience, he founded Techinsurance in 1997 to provide insurance products for IT professionals. It has grown to become one of America's leading online providers of Business Owner’s Policy packages and workers’ comp insurance.