If you manage a SaaS company, you know the high demand that your company faces. You have to provide stable, fast, and effective services to all your clients every day. But if your software system fails, your company could be in trouble.
Whether your system experiences a cyberattack or software issues, you lose money the moment your service stops working. Then, your clients lose money and your business could be facing lawsuits.
That is why you need SaaS insurance. Business insurance can cover your income loss when your software fails, and it could cover lawsuits against your company from a software failure.
You have many different types of insurance to consider as a SaaS company. You should probably get general liability insurance and property insurance. You will need workers’ compensation insurance as that is required by law in many states. Some business property insurance would be good to protect your physical business assets. Then, you can consider directors and officers insurance, technology errors & omissions insurance, cyber liability insurance, and others.
Yet, you have not even considered the specific details that go with each type of insurance. For example, you need to give special attention to cyber insurance and consider hiring some cyber brokers to help you find the right type of cyber insurance in the hardening cyber insurance market.
Are you thinking that SaaS insurance is overwhelming? Did you just want to get cheap business insurance and move on to other business matters? Well, insurance is not something that should be taken lightly. If you get the wrong coverage for your business, you may have to pay out of pocket for some huge expenses that could arise.
Insurance does not have to be overwhelming though. We have the information you need to consider for your small business insurance, your startup insurance, and your cyber insurance so your business is fully prepared for any risks you may face.
Questions?
We can help! Talk to the Trava Team and see how we can assist you with your cybersecurity needs.
Small Business Insurance
If your SaaS business is a small company, you should consider small business insurance. Like most insurance, small business insurance can protect your business’s assets, property, and income.
The most common types of insurance that small businesses need include general liability insurance, business income coverage, commercial property insurance, and workers’ compensation insurance. There are also some more specific insurance policies your small business may need to consider depending on what your business does. For example, if your business owns and operates business vehicles, you need commercial auto insurance.
If your small business is structured as a limited liability company (LLC), you probably need business insurance for LLC. LLC insurance will help protect your company from liability claims that can occur during your normal operations like injury or property damage either caused by business operations, employees, or products.
Your small business insurance cost will vary based on a couple of factors. First, your industry is a key factor. For example, a construction company will pay more than an advertising firm for the same coverage because they have a higher risk for employee injury. Location is another factor in cost as some state laws dictate premium rates. The size of your company will affect your insurance cost as well because more employees mean more chances for injury or accident. Also, your payroll and sales can affect your premium. Finally, any prior insurance claims you have made will increase your premium because insurance companies will flag you as a high risk.
With all the variables that affect your insurance costs, you can receive many different quote prices from different insurance companies. You can use this to your advantage though. You can gather many different quotes until you find a small business insurance company that will provide you with the coverage you need at an affordable premium rate.
Startup Insurance
If your SaaS company is just starting, you have some special considerations for your startup insurance. Start-up costs for insurance business can vary.
First, you should equip your startup business with some basic insurance policies. You should at least get general liability insurance, which will cover claims involving bodily injuries and property damage caused by your products, services, or operations. You should also consider business property insurance to cover you if your company is robbed. Depending on your location, workers’ compensation insurance may be required, so you should research if you need that insurance as well.
You only want to start with basic insurance policies because of the start-up costs for insurance. Business that has just begun possess a much higher risk for collapse than established business. So, insurance companies could charge your startup business substantially more for an insurance policy.
You will save money on insurance if you start with the basic coverage then add more insurance later after your business is established and more insurance companies are willing to take a risk on you.
But do not neglect all insurance. If something were to happen to your business, you could be facing huge out-of-pocket expenses that your start-up business simply cannot afford. So, cover your major risks with insurance and add more insurance as your startup grows.
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Cyber Insurance
While you consider different categories and types of insurance your company may need, you must also consider cyber insurance.
As Forbes reported, cybercrime cost U.S. businesses over $6.9 billion in 2021. With that cost, only 43% of businesses feel financially prepared to face a cyber-attack in 2022. Obviously, cyber risk is high—and it is a risk your small business should not take.
Cyber insurance can provide cyber liability coverage for the risk of different cyber crimes. These cyber crimes fall into three main categories of financial risk, and an insurance policy should cover most of these risks.
One type of risk is first-party expenses. This includes the cost your business would pay to mitigate the effects of a data breach. Some services an insurance policy should cover here include incident response, forensics services, and PR services.
There are also third-party expenses that an insurance policy could cover. These expenses are related to defending liability claims from outside parties, and they include legal feeds to defend lawsuits and fines for violating certain regulations.
Finally, an insurance policy could cover cybercrime costs, which are financial losses directly resulting from the cyber attack. This would include theft of funds and damage of digital assets.
When you are looking for insurance, you can choose from many different cyber insurance companies. They all offer policies with different coverages at different premiums so you can find one that fits your cyber risk.
Or you could choose to hire a cyber insurance broker who has connections with many cyber insurance companies. This broker has insurance expertise and can work to find the best policy for your business, making your insurance search easier.
Whatever method of acquiring insurance you choose, you need to make sure that your insurance policy covers certain cyber risks. Below, we have a cyber insurance coverage checklist, so you can be sure that your insurance is protecting you.
- Cyber extortion coverage (including ransomware)
- Social engineering coverage
- Business interruption coverage
- Virus transmission coverage
- Liability implications coverage
If your policy includes coverage for all these potential cyber crimes, your business will be well protected from any cyber risk you may encounter.
Cyber Security Insurance For Small Business
Cyber security insurance is critical for any business as cyber threats abound. But cyber security insurance for small business is especially important.
The U.S. Security and Exchange Commission reports that over half of small businesses that experience a cyber attack go out of business. It’s no surprise, with the increasing cyberattack costs, that small businesses are simply unprepared to pay for the results of a cyber attack.
Cyber insurance could make the difference between your business surviving a cyber attack or closing its doors after the attack—that difference makes cyber insurance a worthy investment.
Aside from the obvious benefit of keeping your business running, there are many other cyber insurance benefits. When you purchase cyber insurance, you can be covered for services that help you communicate with media after a cyberattack and services that provide legal assistance to navigate liability claims.
Before you receive these cyber insurance benefits, you might have to meet some cyber insurance requirements. For example, you might need to establish a certain level of cyber security, or you might need to implement a specific risk mitigation plan.
These requirements can be complicated and overwhelming. But Trava is here to help. We can carefully assess your cyber risk and your security weak points. Then, we will work with you to develop a risk mitigation program that decreases your cyber risk.
Sources
- https://www.thehartford.com/small-business-insurance/llc-insurance
- https://www.nerdwallet.com/article/small-business/business-insurance-cost
- https://www.svb.com/startup-insights/startup-strategy/startup-insurance-guide-for-founders
- https://www.forbes.com/sites/chuckbrooks/2022/06/03/alarming-cyber-statistics-for-mid-year-2022-that-you-need-to-know/?sh=43adec97864a
- https://www.sec.gov/news/statement/cybersecurity-challenges-for-small-midsize-businesses.html#_edn6