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Why do data scientists need insurance?
Your clients view you as a cutting-edge solution to their business problems. If a client suffers a financial loss or if you're unable to fulfill a contract, you could end up facing a lawsuit. Protect yourself from legal fees, medical bills, and other expenses with the right insurance coverage for data scientists.
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With Insureon, data scientists and other business intelligence (BI) experts can get coverage the same day they apply for quotes.
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What types of business insurance do data scientists need?
These policies provide coverage for the most common risks in data science.
Technology errors and omissions insurance
Technology errors and omissions insurance, or tech E&O, covers lawsuits alleging negligence in your work. You can often add endorsements for SLA breaches and IP disputes.
BEST FOR
- Flawed models or analyses
- Failure to meet promised metrics
- Outages and downtime
Cyber insurance
This policy helps data scientists recover financially after a data breach or cyberattack. It's recommended for any business that stores personal information.
BEST FOR
- Data breach investigations
- Client notification costs
- Fraud monitoring services
General liability insurance
This policy covers basic data science business risks, such as client injuries and client property damage. Bundle it with property insurance for savings in a business owner’s policy.
BEST FOR
- Slip-and-fall accidents
- Damaged customer property
- Libel or slander lawsuits
Fidelity bonds
Fidelity bonds compensate your clients if an employee at your data science business steals from them. Your clients might require you to purchase a bond.
BEST FOR
- Unlawful data access by an employee
- Unauthorized money transfers
- Other employee theft or fraud
Workers’ compensation insurance
Most states require workers' comp for data science businesses that have employees. It also protects sole proprietors from work injury costs that health insurance might deny.
BEST FOR
- Employee medical expenses
- Disability benefits
- Lawsuits from work injuries
Commercial auto insurance
This policy covers the cost of an accident involving a vehicle owned by a data science business. Most states require this coverage for business-owned vehicles.
BEST FOR
- Injuries caused by a company vehicle
- Accidental property damage
- Vehicle theft and vandalism
Looking for different coverage? See more policies.
How much does data scientist insurance cost?
A data scientist who works independently will pay less for insurance than a larger business.
Average data scientist insurance prices are:
- E&O insurance: $65 per month
- General liability: $30 per month
The following factors can affect premiums during the underwriting process:
- Services you offer, such as healthcare or insurance data modeling
- Business property and equipment
- Business revenue
- Size of your data science team
- Years of experience in your field
- Cybersecurity controls, such as multi-factor authentication
- Policy limits and deductibles
- Claims history
How do I get data scientist insurance?
It's easy to get business insurance for data scientists, data analysts, and data engineers if you have your company information on hand. Our application will ask for basic facts about your company, such as revenue and number of employees. You can buy a policy online and get a certificate of insurance with Insureon in three easy steps:
- Complete a free online application.
- Compare insurance quotes and choose a policy.
- Pay for your policy and download a certificate.
Insureon's licensed agents work with top-rated U.S. insurance companies to find coverage that fits your business, whether you work in data visualization, machine learning, predictive modeling, or a related field.
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FAQs about business insurance for data scientists
Review answers to common questions about data scientist insurance.
Why is business insurance important for data scientists?
Data scientists need insurance to sign contracts with clients and protect against unexpected costs that could devastate their small business.
One of the most important policies for data scientists is technology errors and omissions insurance (tech E&O), which bundles third-party cyber insurance and errors and omissions insurance at a discount.
Tech E&O covers legal defense costs if a client files a lawsuit related to professional negligence. That might include:
- Python bugs in a data model
- Overlooked step in a workflow or methodology
- Faulty or inaccurate data analysis
- Late delivery of a data model
Data breach lawsuits are another major concern for businesses responsible for the security of client data. The third-party cyber insurance included in tech E&O covers legal costs if a client suffers a data breach and holds your company responsible for failing to prevent it.
You'll also need standard cyber insurance, or data breach insurance, to cover the risk of a security breach at your own company.
What is the difference between tech E&O and professional liability for data scientists?
Errors and omissions insurance is sometimes called professional liability insurance or malpractice insurance, depending on the industry. In short, professional liability insurance is just another name for E&O insurance.
E&O insurance / professional liability covers mistakes and oversights in your professional work. For example, a senior data scientist might rely on automation for low-level data analytics, unaware of an error in the algorithm. The incorrect results lead to poor decision-making and a botched product launch, and a stakeholder sues the data scientist to recoup their losses.
For tech companies, E&O insurance is often purchased in a tech E&O package (also called tech professional liability insurance), which includes both E&O insurance and cyber insurance. If you work in a field where a client could blame you for failing to prevent a data breach, then tech E&O insurance would provide the appropriate coverage.
Does data scientist insurance cover SLA penalties?
Service level agreement breaches, or SLA breaches, are a major concern for data scientists, as situations outside your control can affect your ability to meet a contract. If a data scientist's work doesn't meet agreed-upon standards, they might have to pay damages or penalties.
Examples of SLA breaches can include:
- Downtime of a fraud detection model that monitors transactions
- Forecasting models that drop below a certain level of accuracy
- Late delivery of a customer churn model that delays a product launch
Many insurance policies won't cover liquidated damages and contractual penalties from a breach of contract, unless they are specifically endorsed.
Consult an agent to make sure your E&O policy covers everything you need if your company breaches a contract. You can add endorsements for other unique risks as well, such as privacy and discrimination claims related to use of generative AI.
What other types of insurance do data scientists typically need?
As part of a strong risk management plan, data scientists should consider these additional coverages:
- Intellectual property (IP) insurance covers legal defense costs related to IP disputes, such as accidental misuse of proprietary data or an allegation of a stolen data model.
- Business owner's policy (BOP) combines general liability coverage with commercial property insurance at a lower cost than purchasing the policies separately. It protects against common third-party claims and business property damage.
- Business interruption insurance protects against financial losses from a temporary forced closure due to a fire or other covered property claim. It's also called business income insurance.
- Employment practices liability insurance (EPLI) pays for legal costs related to violations of employee rights, such as unfair hiring practices or wrongful termination.
- Directors and officers insurance (D&O) protects your board members and officers from lawsuits related to the decisions they make on behalf of your data science firm.
Our insurance agents can tailor coverage for the type of work you do, whether you collect and clean data, develop AI models to forecast trends, or make business recommendations to stakeholders.
Does a freelance data scientist need insurance?
Freelancers and consultants face many of the same risks as bigger businesses, but with their own personal assets at stake. Business insurance can help cover legal defense costs, medical expenses, and theft or damage to your equipment.
When you work as a freelancer, you can't rely on an employer to handle liability claims. If a client claims your data model caused them to lose money, the result could be a costly lawsuit. This is where insurance comes in and can help protect your business.
General liability insurance covers accidental bodily injuries and property damage, while tech E&O covers accusations of faulty projections and other negligent acts. Clients may require you to carry both types of coverage to gain peace of mind in the event of an accident or lawsuit.
Cyber insurance is also a worthwhile investment, as cybercriminals prefer to target smaller businesses with fewer defenses.
Even when it's not required by law, you may want to invest in workers' comp to guard against costly medical bills from a workplace accident. Personal insurance policies like homeowner's insurance or health insurance usually don't cover work-related incidents, which is a big reason why freelancers need commercial insurance.