The Industry and Business Model and Scope of Potential Damages
Posted: Wed Feb 19, 2025 9:55 am
Other factors include the industry your business is in and the inherent scope of any potential liability. The worst thing a hairdresser can do is hit someone's ear or cause an allergic reaction. In this case, potential damages are in the $100 range.
But a development company that outsources to Amazon is in a very different situation. If a failure in their delivery leads to a hack, or significant downtime, that means millions of dollars in damages.
A B2C SaaS that stores thousands of customer records, including credit card information, is also more vulnerable.
Coverage Limit and Premiums
The coverage limit is the maximum payment of a specific policy. This limit has a direct impact on the insurance premium.
When you work with an insurance agent, you may think they are recommending an astronomical coverage limit to get a higher premium.
While this may sometimes be the case, startups are vulnerable to bosnia and herzegovina phone number datalawsuits and can face costly worst-case scenarios.
You should choose limits that reflect your industry, your company size, and your business model.
Employee Risk
Employee risk also influences your company's insurance costs. In particular, it is a factor in health and workers' compensation insurance policies. Most employees at startups fall into the white-collar job category, which is considered very low risk. Luckily, insurance policies reflect this, so insuring your office workers typically costs only a small percentage of their salary.
If you employ manual workers, such as carpenters, you will likely pay more in insurance for those few employees than for your entire administrative staff combined.
Location
You are always subject to local state laws and regulations, which impacts the policies required for your business and the cost.
Commercial property insurance is also greatly affected by property prices, the risk of extreme weather conditions, etc.
But a development company that outsources to Amazon is in a very different situation. If a failure in their delivery leads to a hack, or significant downtime, that means millions of dollars in damages.
A B2C SaaS that stores thousands of customer records, including credit card information, is also more vulnerable.
Coverage Limit and Premiums
The coverage limit is the maximum payment of a specific policy. This limit has a direct impact on the insurance premium.
When you work with an insurance agent, you may think they are recommending an astronomical coverage limit to get a higher premium.
While this may sometimes be the case, startups are vulnerable to bosnia and herzegovina phone number datalawsuits and can face costly worst-case scenarios.
You should choose limits that reflect your industry, your company size, and your business model.
Employee Risk
Employee risk also influences your company's insurance costs. In particular, it is a factor in health and workers' compensation insurance policies. Most employees at startups fall into the white-collar job category, which is considered very low risk. Luckily, insurance policies reflect this, so insuring your office workers typically costs only a small percentage of their salary.
If you employ manual workers, such as carpenters, you will likely pay more in insurance for those few employees than for your entire administrative staff combined.
Location
You are always subject to local state laws and regulations, which impacts the policies required for your business and the cost.
Commercial property insurance is also greatly affected by property prices, the risk of extreme weather conditions, etc.