Network Security Company Insurance

Your clients depend on you to protect them from ever-evolving cyber threats, which can damage their reputation and their bottom line. If a data breach happens at their business, they may sue your firm in order to recoup the cost of notifying affected clients, restoring public relations, and investigating the incident.

Technology errors and omissions insurance, also called tech E&O, covers legal defense costs if a client blames you for a security lapse or other act of professional negligence.

Tech E&O includes both of the following in a cost-effective package:

• Errors and omissions insurance (E&O), which protects against legal costs related to professional errors and oversights.
• Third-party cyber insurance, which extends that protection to mistakes and other negligent acts that cause cyber incidents.

Your clients may require you to carry tech E&O in the terms of their contracts. Even when it's not required, it's worth carrying this coverage to protect against common tech E&O claims.

You'll also need cyber insurance, or data breach insurance, to cover data breaches and cyberattacks at your own company. It's a worthwhile investment for small businesses, who are often targeted because of their limited defenses. Cyber insurance helps pay for data breach investigations, ransomware attacks, and notification costs that can add up quickly.

In some cases, business insurance is required by law. Clients, landlords, and lenders might also require you to carry coverage.

Here are several situations where network security firms must have insurance:

• You rent an office or apply for a loan. You might need general liability insurance to sign a lease or get a business loan.
• Your clients require coverage. Clients may include tech E&O, general liability, or a fidelity bond in their contractual requirements to gain protection against financial losses related to your services.
• You have employees. Most states require workers' compensation for businesses that have employees.
• You have a company car. Similarly, you'll need commercial auto insurance to comply with state laws if your business owns a vehicle. 

Even when it's not required, it's important to have insurance. Without it, medical bills or legal costs from a single accident or error could potentially bankrupt your business.

As part of a strong risk management strategy, network security specialists should consider these additional insurance products:

• Commercial property insurance helps businesses recover from fires, storms, burst pipes, and burglaries. It covers your building and also includes business personal property (BPP) coverage for computers, furnishings, and other items inside your office.
• 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 losses from a temporary forced closure tied to a covered property claim. It's also called business income insurance.
• Intellectual property (IP) insurance covers legal costs related to IP issues, such as disputes over the ownership of proprietary security software.
• 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 (D&O) insurance protects your board members and officers from lawsuits related to the decisions they make on behalf of your firm. You can bundle it with other types of management liability insurance, such as EPLI.
• Hired and non-owned auto (HNOA) insurance covers auto accidents involving personal, rented, or leased vehicles used by your business.
• Commercial umbrella insurance provides additional coverage for liability claims made on general liability, commercial auto, or employer’s liability insurance, once the underlying policy's limit has been reached.

Our agents can help you find the right coverage for your network security business, whether you own a sole proprietorship, a startup, or a well-established firm with employees.

Some of the top factors that affect insurance costs for network security businesses include:

• Business location: Localized factors such as crime rates, healthcare costs, foot traffic, risk of natural disasters, and property values can impact your insurance premiums.
• Value of property and equipment: Expect to pay more if you need insurance for an office or many computers, servers, and cubicles.
• Annual revenue: In general, businesses that earn more revenue are associated with costlier claims, which means they pay more for insurance.
• Number of employees: A bigger workforce means an increased risk of accidents and errors, which raises the cost of general liability, E&O, and workers' comp.
• Risk reduction: Insurance companies often provide discounts for approved cybersecurity controls, such as multi-factor authentication.
• Coverage limits and deductibles: You can save money on insurance by opting for lower limits or higher deductibles on your policies, but make sure it's enough to cover a potential claim.
• Claims history: A network security firm that has filed insurance claims in the past will pay more for insurance than one with a clean claims history.

Different providers offer different rates, which is why it's important to shop around. With Insureon, you can compare quotes from trusted providers with our easy application, and a licensed agent will help make sure you get the right coverage for your needs.