How much does business insurance cost for cloud computing service providers?
Small business owners can save money on commercial insurance by comparing quotes from different providers with Insureon. Cloud computing insurance costs depend on the type of policy, coverage limits, deductibles, and factors such as your business's location and number of employees.
Top cloud computing business insurance policies and their cost
Here are the top insurance policies purchased by cloud computing companies and their average monthly costs:
- Technology errors and omissions insurance (tech E&O): $126 per month
- Cyber insurance: $130 per month
- Fidelity bonds: $105 per month
- General liability insurance: $33 per month
- Workers' compensation: $45 per month
- Commercial auto insurance: $394 per month
Our figures are sourced from the median cost of policies for technology service providers who apply for quotes with Insureon. The median offers a better estimate of what your business is likely to pay because it excludes outlier high and low premiums.
Technology errors and omissions insurance
Cloud computing service providers pay an average of $126 per month, or $1,516 annually for tech E&O insurance. This policy bundles errors and omissions insurance with cyber insurance at a lower cost than buying the policies separately.
Errors and omissions insurance, also known as professional liability insurance, provides financial protection against claims of professional negligence. For example, a service outage could financially harm a client, who might sue your business to recoup their losses.
Tech E&O adds third-party cyber insurance to this coverage, which extends protection in case your mistake or oversight leads to a data breach or cyberattack at a client's business.
This is the average E&O insurance policy for cloud computing businesses that buy from Insureon:
Insurance premium: $126 per month
Policy limits: $1 million per occurrence; $1 million aggregate
Deductible: $2,500
The cost of errors and omissions insurance depends on factors such as the coverage limits you choose, the size of your business, and the cloud services you offer.
Cyber insurance
Cloud computing companies pay an average of $130 per month, or $1,556 annually, for cyber insurance. This policy is vital for businesses that store customer information, such as credit card numbers, Social Security numbers, and email addresses.
Cyber insurance covers the cost of complying with your state's data breach laws after a cyber incident. It can pay for legal fees, customer notification costs, and data recovery efforts related to a data breach or cyberattack. You may also see this policy referred to as cyber liability insurance or cybersecurity insurance.
The cost of cyber insurance primarily depends on the amount of personal information handled by your cloud services business.
Fidelity bonds
The average cost of a fidelity bond is $105 per month for cloud computing service providers, or $1,254 annually. Some clients, especially in the financial services industry, may require a bond before they will agree to use your cloud services.
Fidelity bonds reimburse your client if one of your employees commits fraud, theft, or forgery, including embezzlement.
The cost of a fidelity bond is typically a small percentage of the bond amount.
General liability insurance
Cloud computing service providers pay an average of $33 per month, or $400 annually, for general liability insurance.
A general liability policy helps pay for legal costs from accidents that harm a client or damage their property, along with advertising injuries. For example, it would cover costs if a client trips on a loose rug at your office and sprains an ankle.
This is the average general liability coverage for cloud computing companies that buy from Insureon:
Premium: $33 per month
Policy limits: $1 million per occurrence; $2 million aggregate
Deductible: $500
Insureon’s licensed agents typically recommend a business owner’s policy (BOP), which combines general liability insurance with commercial property insurance at a discount to protect your computers, servers, furnishings, and other business property.
For cloud service providers, the average premium for a business owner's policy is $73 per month or $870 annually. You can also add business interruption insurance to protect against financial losses from a forced closure due to a fire or storm.
The cost of general liability insurance depends on factors such as the coverage limits you choose, the size of your business, the amount of foot traffic, and any subcontractors or additional insured endorsements. Learn more about how your premium is calculated.
Workers' compensation insurance
Cloud computing service providers pay an average of $45 per month, or $536 annually, for workers' compensation insurance.
This policy covers medical expenses and disability benefits when you or an employee suffers a work-related injury or illness. For example, an employee might suffer a back injury from lifting heavy equipment or trip over a power cord and sustain an injury.
Businesses that have employees typically must purchase workers' comp to comply with state requirements and avoid penalties. It's also recommended for sole proprietors, as health insurance plans can deny claims for injuries related to your job.
Most policies include employer's liability insurance, which covers the cost of lawsuits related to workplace injuries.
The cost of workers' comp depends on the number of employees and their occupational risks, among other factors.
Commercial auto insurance
Tech companies and IT contractors pay an average of $394 per month, or $4,723 annually, for commercial auto insurance.
This policy can pay for property damage and medical bills from accidents involving your company vehicle. It can also cover vehicle theft, vandalism, and weather damage.
Most states require this type of insurance for vehicles owned by a business. For personal, rented, and leased vehicles used for work purposes, look to hired and non-owned auto insurance (HNOA) instead.
The cost of commercial car insurance depends on several factors, including the policy limits you choose, coverage options, the value of your vehicle, and the driving records of anyone permitted to drive.
Key factors influencing policy costs
Your insurance provider calculates your cloud computing business insurance premiums based on a number of factors, including:
- Type of data you handle: Cloud computing companies that handle highly sensitive data, such as medical records or financial information, may see elevated premiums compared to other cloud computing businesses.
- Number of employees: The more employees that your cloud computing business has on staff, the more opportunities there are for accidents to happen or cyber incidents to occur.
- Location: If your cloud computing company is located in or performs services around areas that are more prone to natural disasters, increased foot traffic, or high crime rates, you may have to pay higher insurance costs than those who are located in areas where these factors are less present.
- Security measures: Cloud computing businesses that bolster themselves with more stringent cybersecurity practices and a thorough risk management plan could see lower rates than companies with fewer security measures in place.
- Coverage limits and deductibles: Higher coverage limits and lower deductibles on your policy will typically increase premium costs, while lower limits and a higher deductible can help keep insurance rates lower.
- Business size and revenue: Insurance companies often assume that cloud computing businesses that are making more money are also going to be facing increased industry exposure, which results in higher premiums.
- Type of business structure: A self-employed cloud computing professional may not have to pay as much for insurance as a larger startup with multiple employees.
- Business equipment and property: More valuable cloud computing systems are likely to result in higher premiums. Similarly, any computers or other equipment that is used frequently tends to cost more to cover than more infrequently used items.
- Types of insurance coverage purchased: Some policies are required to obtain contracts for cloud computing businesses. These required policies often are needed to cover more expensive accidents and lawsuits, which tend to cost more than basic coverages.
- Claims history: A cloud computing company with a lengthy list of previous insurance claims will likely pay more for insurance than a company with no claims history.
How do I get cloud computing service provider insurance?
Insureon can help cloud computing companies, data centers, and managed service providers (MSPs) find affordable insurance coverage and peace of mind in three easy steps:
- Fill out a free online application with details about your business.
- Compare custom quotes from top-rated U.S. insurance providers.
- Select a policy and pay the premium to begin coverage.
You can consult a licensed insurance agent for questions about your risks, state insurance requirements, and the best coverage for your business needs. Once you've bought a policy, you can download a certificate of insurance (COI) for proof of coverage. Most small business owners can get insured within 24 hours of applying for quotes.
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