Why do cloud computing businesses need insurance?
Your clients depend on your services to work anywhere in the world, but if there's a disruption, the result could be a lawsuit. Business insurance protects cloud computing companies from hefty legal fees and settlements. It can also cover costly injuries, fires, cyberattacks, and auto accidents.
Find affordable coverage
Cloud solutions providers can save money by comparing free quotes from top insurance companies.
Fill out Insureon's easy online application to get quotes and advice from a licensed insurance agent.
What types of insurance do cloud computing businesses need?
These insurance products cover common risks for cloud computing firms.
Technology errors and omissions insurance
Tech E&O covers legal costs related to your work performance, such as a client who sues over a cloud-based service outage. You can often add intellectual property and media liability coverage.
- Data loss from system failure
- Data breach lawsuits
- Breach of a service level agreement (SLA)
General liability insurance
This policy covers basic business risks, such as accidental damage to a client's property. You can often combine it with property insurance at a discount in a business owner's policy (BOP).
- Slip-and-fall accidents
- Damaged customer property
- Libel and slander lawsuits
Cyber insurance
This policy helps cloud service providers financially survive data breaches and cyberattacks. It’s sometimes called cybersecurity insurance or cyber liability insurance.
- Client notification expenses
- Fraud monitoring costs
- Data breach investigations
Commercial auto insurance
This policy covers the cost of an accident involving a vehicle owned by your cloud platform computing firm. Most states require this coverage for business-owned vehicles.
- Car accidents
- Vandalism and theft
- Weather damage
Workers’ compensation insurance
Most states require workers' comp for cloud technology companies that have employees. It also protects sole proprietors from work injury costs that health insurance might deny.
- Employee medical expenses
- Disability benefits
- Lawsuits from workplace injuries
Fidelity bonds
Fidelity bonds compensate your clients if one of your employees steals from them. Your clients might require you to purchase a bond, especially if you work in financial services.
- Unlawful data access by an employee
- Unauthorized money transfers
- Other employee theft or fraud
How much does cloud computing business insurance cost?
Cloud computing professionals who buy policies through Insureon pay an average of $126 per month for E&O insurance and $33 per month for general liability insurance.
A cloud computing company with only a few employees will pay less for insurance than a large-scale cybersecurity business.
Factors that affect cloud service provider premiums during underwriting include:
- IT / tech services offered, such as machine learning (ML), artificial intelligence (AI), or software-as-a-service (SaaS)
- Business property and equipment
- Business size and annual revenue
- Types of insurance policies purchased
- Policy limits and deductibles
- Number of employees
- Claims history
How do I get cloud computing insurance?
It's easy to get cloud computing, data center, or managed service provider (MSP) business insurance if you have your company information on hand. Our insurance application will ask for basic facts about your business, such as revenue and the number of employees. You can buy a policy online and get a certificate of insurance (COI) with Insureon in three easy steps:
- Complete a free online application.
- Compare insurance quotes and choose policies.
- Pay for your policy and download a certificate.
Insureon's licensed agents work with top-rated U.S. insurers to find cost-effective cloud insurance for your company, whether you work independently or hire employees.
Verified business insurance reviews
Hear from customers like you who purchased small business insurance.
"When cloud systems fail, the financial impact of the service outage can extend across many customers simultaneously, which is why cyber and errors and omissions coverage are must-have policies."
FAQs about cloud computing business insurance
Review frequently asked questions (FAQs) about cloud computing insurance and more.
Why is business insurance important for cloud computing companies?
Cloud computing companies power critical business operations—from data storage and automation to infrastructure management and security. When something goes wrong, the financial fallout can be significant. Even a single incident can lead to costly lawsuits, regulatory scrutiny, and reputational damage, whether you're just starting your business or are well established.
Here’s how two key coverages help protect your business:
Cyber insurance: If your cloud environment is compromised—whether through a data breach, ransomware attack, account hijacking, insider threat, or other security failure—your company may be responsible for the financial consequences.
For example, if a cybercriminal gains access to customer data hosted on your platform, you could face expenses related to:
- Customer notification and credit monitoring
- Forensic investigations
- Legal defense and settlements
- Regulatory fines and penalties
- Public relations and crisis management
Cyber insurance helps cover these costs, so your business can recover faster after a cyber incident.
Technology errors and omissions insurance: Not all claims stem from malicious attacks. Sometimes, a mistake, oversight, or system failure can lead to client losses.
If your cloud computing system goes down, is misconfigured, or contains a security gap that disrupts your client’s operations, they may sue for the resulting financial damage. Common allegations include:
- Service outages
- System failures
- Insecure APIs
- Cloud misconfigurations
- Data exposure due to configuration errors
Technology errors and omissions insurance, sometimes called tech E&O or tech professional liability insurance, is a bundle of E&O with cyber insurance. This policy helps cover legal fees, settlements, and court costs if a client claims your professional services caused them financial harm.
Together, cyber insurance and tech E&O provide comprehensive protection against both security incidents and professional liability risks, helping safeguard your cloud computing business from the most common and costly exposures.
Is my client covered if my cloud computing business is breached or has an outage?
It depends on the insurance coverage in place—both yours and your client’s.
Because cloud platforms often support many customers at once, a single breach or outage can impact multiple businesses. Clients may experience lost revenue, operational downtime, data recovery costs, or regulatory penalties. When that happens, several claims can arise from one incident, significantly increasing your financial exposure.
Your cyber insurance may respond to costs related to a security failure, while technology errors and omissions (tech E&O) insurance can help cover legal expenses if clients claim your services caused financial harm.
Many clients also carry cyber insurance with contingent business interruption (CBI) coverage. CBI helps cover a company’s lost income when a third-party provider, such as a cloud computing vendor, experiences a breach or outage that disrupts operations.
Because these incidents can affect many clients at once, having the right coverage in place is critical to protecting your business.
Do cloud service businesses need professional liability insurance?
Much like other technology-focused businesses, cloud computing firms aren't required by law to carry professional liability insurance. However, it should be a key component of your disaster recovery and prevention plan.
Professional liability insurance, also called professional indemnity insurance or errors and omissions (E&O) insurance, protects you in the event a client files a lawsuit against your cloud computing company for an error, mistake, or professional negligence.
This coverage is especially critical if you work with clients in highly regulated industries, such as healthcare or financial services, where service downtime or service level agreement (SLA) breaches could lead to multiple claims or significant financial loss.
You can bundle professional liability insurance for cloud computing businesses with cybersecurity insurance into a technology professional liability policy, which is more commonly referred to as tech E&O. This would be a more affordable insurance solution than purchasing the policies individually.
What's the difference between first-party and third-party cyber insurance?
Cyber insurance provides coverage for incident response and its associated costs when you or your customers are affected by a data breach, cyberattack, social engineering scam, phishing, or other cyber threat. More specifically, there are two kinds of cyber liability coverage you should consider for your cloud computing business:
- First-party cyber insurance protects your cloud computing service business against data breaches and data security attacks that affect you directly, such as a DDoS attack that overwhelms your network. This is crucial coverage if you handle personally identifiable information (PII) or other sensitive customer information.
- Third-party cyber insurance provides legal protection if a client blames your cloud company for failing to prevent a data breach or cyberattack at their business.
Tech E&O insurance coverage typically includes both types of cyber insurance, along with E&O insurance to safeguard your cloud business against other lawsuits from dissatisfied clients.
What other types of business insurance do cloud computing businesses need?
Outside of cyber insurance and tech E&O coverage, cloud computing professionals should consider the following as part of their risk management plan:
- Business owner's policy (BOP) combines general liability coverage with commercial property insurance at a discount. It protects against common third-party lawsuits and business property damage. You can also add equipment breakdown coverage as a policy endorsement.
- Electronic data processing (EDP) insurance covers electronic devices such as computers, storage devices, and the data they contain during a power surge, fire, natural disaster, or similar incident. Also known as computer coverage or data processing coverage, EDP insurance can help protect your business income against financial losses from data corruption or loss.
- Business income insurance, also known as business interruption coverage, offsets your lost income when your business is forced to close because of a covered peril, such as property damage. These funds help cover your normal operating expenses until you can resume business operations.
- Employment practices liability insurance (EPLI) safeguards your business if you're sued by an employee over wrongful termination or another violation of employee rights. EPLI can also be added as an endorsement to a general liability or business owner's policy.
- Directors and officers (D&O) insurance protects your board members and officers from legal expenses if they're sued over a decision they made on behalf of the company that led to a financial loss. D&O is a type of management liability insurance that provides reimbursement for legal costs (indemnification) for lawsuits related to mismanaged funds, employee grievances, failure to comply with regulations, and more.
- Intellectual property (IP) insurance provides businesses with vital protection against IP disputes. It ensures valuable intangible assets are safeguarded so businesses can focus on innovation and growth instead of worrying about costly legal battles. This type of coverage is usually added as an endorsement to an E&O policy.
How can I save money on cloud computing insurance policies?
The insurance sector often has a wide range of pricing for the same policies, which is why it's important to shop around as part of your decision-making process. You can start by comparing free business insurance quotes with Insureon.
Our licensed insurance agents can help make sure you get the right coverage for your cloud computing business at an affordable price. Most small businesses can get insured and download a certificate of insurance (COI) within hours of applying for quotes.
Read more about how to save money on insurance.