SaaS Business Insurance

Whether you're just starting your business or own a well-established firm, mistakes made by your SaaS business can have a tremendous impact on your clients. If they end up losing money, the result could be a lawsuit.

Errors and omissions insurance (E&O), also called professional liability insurance, covers legal costs if a client sues your business over negligence, such as an error that caused downtime. It's often required in contracts, as it protects your clients from potential losses related to your company's services.

Technology businesses often bundle E&O with third-party cyber insurance in a package called tech E&O, which covers lawsuits related to failures in cybersecurity. Even if your company wasn't at fault, a client might file a frivolous lawsuit in an attempt to recover costs from a data breach or other disruption.

You'll also need cyber insurance and other business insurance policies to protect your company against data breaches, employee injuries, and other costly incidents.

When your SaaS company hosts data on a cloud provider like Amazon Web Services (AWS), you take on part of the risks and responsibilities. The cloud provider supplies the infrastructure, while your company may be responsible for cloud storage settings, access control, and directly handling client data.

Two forms of cyber liability insurance protect you and your clients:

• First-party cyber insurance: This coverage offers protection against cyber incidents at your own business, such as a data breach that exposes your clients' email addresses or other personal information.
• Third-party cyber insurance: This covers your responsibility for cyber incidents that harm clients, such as misconfigured settings on a cloud-based server that expose customer data belonging to your client.

You can typically add first-party cyber coverage to general liability insurance or a business owner's policy (BOP). Third-party cyber coverage is included in a tech E&O bundle along with errors and omissions insurance.

Cyber insurance often includes business interruption insurance, usually to cover outages of your company's own services. You may need to consult an agent to get contingent business interruption insurance, which would cover a cloud provider's outage that affects your clients. You can also add coverage for service-level agreement (SLA) breaches and other related risks.

Depending on your risks, you may need a wide range of insurance products to protect your SaaS company. For example, you may want to consider:

• Commercial property insurance covers your business property and equipment if it's damaged, lost, or stolen at your fixed business location. Should your machinery or equipment suffer a mechanical or electrical failure, equipment breakdown coverage would provide the funds to repair or replace the damaged equipment.
• Business owner's policy: A BOP combines general liability coverage with commercial property insurance at a lower cost than buying the policies separately.
• Electronic data processing (EDP) insurance covers financial losses and lost income related to a failure of computers and other electronic devices, including lost data.
• Business income insurance, also known as business interruption coverage, offsets your lost income and pays for daily operating expenses if your business is forced to close because of a covered peril, such as a fire.
• Intellectual property (IP) insurance covers legal costs related to IP issues, such as a dispute over the ownership of proprietary software.
• Employment practices liability insurance (EPLI) pays for legal fees 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.

If you need help finding the right coverage, don't hesitate to contact an agent. They can help you find cost-saving bundles, choose policies, and add endorsements for any special risks.

It's easy to find affordable insurance with Insureon. Our easy online application lets you compare quotes from trusted providers to find policies that fit your budget and your business risks.

Other ways to save money on business insurance include:

• Bundle policies. You can often save money when you purchase two or more types of coverage in one package, such as a business owner's policy or tech E&O.
• Customize your coverage. Choose lower limits or higher deductibles to reduce your premium, but make sure your policy can still cover a potential claim.
• Focus on cybersecurity. Cybersecurity controls, such as multi-factor authentication, protect your company from data breaches and other cyber incidents. Insurance companies often provide discounts for approved security measures.
• Risk management. Policyholders can prevent employee injuries and customer accidents that lead to claims by eliminating loose power cords and other tripping hazards in the office, and by providing ergonomic setups for employees.

Our insurance agents can help you find the right insurance solutions for your budget and your needs, whether your company offers SaaS products related to productivity, customer relationship management (CRM), finance, healthcare, or software development.