How To Compare EO Insurance Policies
By Space Coast Daily // July 25, 2022
Insurance is one of the most fundamentally important things for start-ups and businesses to have nailed down. In fact, it’s not a bad strategy to make this important factor the very first thing on the agenda. Put simply, if business insurance is not in place then operations should not be happening.
With something so important and fundamental to the success of any business whether for-profit or non-profit, there are a lot of questions.
One of the most common questions is how to find the best policy for your business. Let’s face it, as important as business insurance is, it’s also not cheap. Whether it’s a brand new start-up or a smaller business, insurance may represent a significant investment.
So finding the best policy and not just a good one is always going to be the goal. If you are going to be investing hard-earned resources into business insurance, it needs to be absolutely worth your investment.
For tech industries, EO insurance is perhaps one of the most important liabilities to have covered. But how do you navigate the waters of finding the best insurance policy when it comes to EO insurance?
If you have been wondering how to find the best policy for your business when it comes to EO insurance, here is everything you need to know.
What Exactly is EO Insurance?
EO insurance stands for errors and omissions insurance, and it’s one of the most important forms of insurance for companies that deal with any kind of data and tech. This insurance is built around a concept that is similar to malpractice. Essentially, this insurance protects tech companies from liabilities that deal with their product or service directly.
The liabilities that EO insurance covers for tech companies cover situations where a client could sue the company claiming that they did not deliver on their product as promised. This could be a company that offers a particular app development service and somehow fell behind schedule on developing an app for a client. If the agreement for the app launch is not upheld by the developer, then the client could sue.
Another very important reason for acquiring EO insurance is that it helps companies that deal specifically with handling client data. Data is one of the most valuable commodities in the digital world of business, and it’s something that businesses have to be careful about protecting.
Hackers and cybercriminals are constantly seeking to find ways to steal important and valuable data. Scams that rob or corrupt data are common on the internet, and EO insurance helps protect companies from lawsuits if this happens to them.
What Does EO Insurance Typically Cover?
EO insurance typically covers the cost of legal fees implied by a lawsuit. Court costs, lawyers, and settlement and judgment fees are typically covered under this kind of insurance as well. It is important for companies seeking to acquire EO insurance to have a thorough business plan that includes a contingency plan and best practices in place.
This insurance is meant to protect hard-working companies from honest mistakes, or from situations that they can’t control, such as a client deciding to sue them. EO insurance is not meant to provide coverage for negligence.
What Plan Do You Need?
One of the hardest parts about finding out what insurance is right for you is navigating the cost-benefit ratio. Yes, insurance is necessary, and in many cases should be in place well before operations begin, however it can often come with a hefty price tag.
One of the most important aspects of looking for an insurance provider is finding one that can scale with you. Tech companies in particular are known for scaling quickly. The digital sphere and global market create an amazing setting for rapid growth, which is a good problem to have. While a company within a year or two may be at a spot where they can afford almost any premium, startups often times pinch-pennies and have a strict budget they have to follow.
Finding an insurance company that can help cover what your company needs, and then scale with your company is paramount to success. Thankfully, this kind of flexibility and scalability is not difficult to find. With a focus on affordable, flexible coverage that works to protect your real-life liabilities finding insurance that is affordable at your current stage of growth is possible.
Factors like revenue, location, claims history, and limits all play an important role in setting the premiums for coverage. For smaller company startups that may not have a firm idea of their revenue, insurance providers may use payroll or physical business offices to assess a premium.
Finding the kind of coverage you need at the stage of growth your company finds itself is important. This kind of insurance is one that is so important, that you should seriously consider the consequences of operating without it. Thankfully, with flexible plans, finding the coverage premium that’s perfect for your company is not difficult to do.