January 2014

SaaS Indemnity – What Types of Insurance should a SaaS Company Purchase?

Every SaaS company should have insurance , as any typical business should and would. However, there are a few significant differences that every SaaS company should be aware of (by the way, insurance is a form of indemnity = way to shift/move liability by contract).

1)   Commercial General Insurance. This type of insurance generally protects business owners against claims of liability for bodily injury, property damage, and personal and advertising injury. But what is important, is that this type of insurance only covers ‘tangible property damage.’  Said another way, it does not cover intangible property loss or damage (e.g data and information). So you should get this insurance, but don’t expect that it will cover much for your SaaS company.

2)   Workers Compensation, Auto Liability and Umbrella Policies. I am not going to spend a lot of time on these policies, other than to say get them.

• Workers Compensation: covers employee injuries caused on the job. This type of insurance is required by state law, and is usually not a big issue for SaaS companies (cuz people don’t usually get hurt around software).
• Auto Policies: you know what this covers; nuff said.
• Umbrella Policies: fills in gaps & increases limits of the other policies.

3)   Technology Insurance.  Ok this is where this insurance stuff gets more interesting! Every SaaS company should pay attention to–and get educated about–the variety of technology related insurance products in …