Here’s why you shouldn’t ignore business insurance.

As technology continues to reshape our world, small and mid-sized tech company leaders must not only focus on innovation and growth but also prioritize risk management strategies that can help ensure the longevity of their business. That includes investing in comprehensive commercial insurance coverage, also known as business insurance. 

Getting that coverage can be challenging, however, for two reasons:

1. Small and mid-sized tech organizations are an under-served market, and not all insurance agencies are able to adequately serve their needs. There are providers out there, like Portalus, that specifically cater to the business insurance needs of smaller tech organizations. 
2. Many leaders at small and mid-sized organizations don’t know what they don’t know. As such, they tend to focus only on price when it comes to purchasing insurance coverage. There are multiple factors to consider when choosing the right business insurance policies for your organization, and focusing on the cost alone can leave you and your business in a vulnerable spot when the unexpected happens.

Thomas Price, Vice President of Property & Casualty for Portalus, joined us on The C-Suite Chronicles to talk about why business insurance is essential to the sustainability and success of small and mid-sized tech businesses.

 

Protect Against the Unexpected

Running a small to mid-sized tech business involves lots of moving parts, from developing cutting-edge products to serving clients and managing operations and talent. Despite the most meticulous planning and forecasting, however, unexpected events such as fire, floods, theft, lawsuits, and cyberattacks can disrupt even the most well-established businesses. This is where business insurance comes in, acting as a “safety net” by providing a financial backstop when a company is faced with unforeseen challenges. Some types of business insurance, such as errors and omissions, help safeguard companies, their employees, and other professionals if customers make claims of inadequate work or negligence. 

“Errors and omissions and cyber insurance policies are critical to have in place because that’s where the more catastrophic claims happen,” Tom explained. “When you have that combination of both types of coverages, you have a much higher probability of the claim being covered.” 

 

Mitigate Financial Risks

Smaller tech businesses often operate on lean budgets, and a single major financial setback can have a snowball effect on operations, growth, and employee morale, hindering forward momentum. Business insurance can help mitigate financial risk by covering expenses related to property damage, equipment replacement, liability claims, and legal fees. Without proper business insurance coverage, the outsized burden of these expenses could potentially force a business to close its doors.

When it comes to business insurance coverage, you get what you pay for. In general, cheaper isn’t better. “There’s a common misconception that all insurance policies are the same, therefore, the decision comes down to cost,” Tom said. “It is not a commodity. Not all coverages are the same, and they vary dramatically. If you’re buying solely based on price and you buy the cheapest policy, you run a pretty high risk of being uncovered.”

 

Shield Against Liability

Liability concerns are common in the tech industry, where intellectual property, data security, and client interactions all have the potential for vulnerabilities. For example, if a client claims that your product or service caused them harm or financial loss, the legal costs of defending your business could be astronomical. That’s why it’s important to make sure your business insurance coverage provides liability protection, which helps cover legal fees and settlement costs, so you can address claims without jeopardizing your or your company’s finances.

And not only is it important to protect your business, it’s also vital to safeguard your personal assets. That’s a consideration many tech company leaders often overlook, according to Tom. “Business owners build this robust insurance program for their business while ignoring their personal situation,” he noted. “That’s problematic because business owners can make a mistake so catastrophic that it forces them to liquidate or exit their business to rectify it, putting their personal assets in jeopardy. It’s not common, but I’ve seen it happen, so it’s important to protect yourself.” 

 

Ensure Business Continuity 

Imagine a scenario where your business is compromised by a cyberattack and may have to shut down for a period of time. Cyber liability insurance, a component of business insurance, can help cover the costs of containing the breach, restoring systems, continuing operations, and even compensating for lost income during any downtime. Varying types of business continuity insurance help ensure that your business can continue functioning and serving clients, minimizing the disruption of unforeseen events to your company’s profits and reputation.

 

Build Credibility

For small and mid-sized tech businesses aiming to build trust and credibility with clients, investors, and partners, having comprehensive business insurance can play a pivotal role. Having insurance coverage in place as early on in your business life cycle as possible demonstrates your commitment to protecting your company and demonstrates that you’re taking the necessary steps to prepare for unforeseen challenges and crises that may arise down the road. Being able to show that you’re being proactive about protecting your business may make it easier to attract funding, support, and new customers for your business.

In the dynamic small and mid-sized tech market, embracing innovation and agility is essential; equally important is safeguarding your hard-earned success. Business insurance is more than just a financial safety net. It’s a strategic investment that protects your business against the uncertainties that come with growth and development. 

By mitigating financial risk, protecting against liabilities, ensuring business continuity, and demonstrating your commitment to your employees and clients, you can position your business for long-term sustainability and resilience. While technology can propel your business forward, business insurance ensures that it’s well-protected every step of the way.

To hear our full interview with Tom, check out The C-Suite Chronicles on Apple and Spotify, or watch the video on YouTube.

Not all business insurance policies are created equal, and few agencies are positioned specifically to partner with small- and mid-sized tech companies. Portalus is unique in that we specialize in customizing business insurance solutions specific to the needs of your small to mid-sized tech company. Our agents have more than a decade of experience tailoring business insurance programs for the tech industry. 

Need assistance setting up or revamping your business insurance coverage? Visit our website to learn more and to get in touch, or email Tom directly at tprice@getportalus.com.