Why do SaaS startups need business insurance coverage? What type of business insurance cover do you need to fully protect your software as a service company? And most importantly, what is the minimum business insurance coverage needed for a big data SaaS startup?
SaaS companies are fast-growing businesses and as they grow their business insurance needs grows alongside. In the past decade, SaaS startups have grown to become the dominant software service delivery method in the world today.
The growth of this SaaS model can be largely attributed to the convenience and ease-of-use it has introduced. Users of the SaaS model do not have to lose their peace worrying over the softwares they use and the data centers that power them and server maintenance.
All of these benefits makes the SaaS market an uncontestable market showing no signs of slowing down or declining in acceptance any time soon. But with this level of growth, efficiency and innovation there comes a dire need for business insurance coverage.
As the SaaS market is receiving traction, it is also facing the risks of data breaches and cyber attacks which is informed by the personally identifiable data (PII) it thrives on. Hackers want access to these information and since SaaS startups are repositories of these information, they attack them.
It is incredibly important for a SaaS startup to secure cyber liability insurance coverage in the advent of an attack. There are immense benefits every big data SaaS startup can derive from having a business insurance coverage.
5 Benefits of a Business Insurance For Your Big Data SaaS Startup
Insurance is a form of risk management used to manage the risk of potential financial, property and information loss. These are some of the benefits your SaaS startup stands to gain from a business insurance coverage:
1. Reduction of Financial Losses
Your big data SaaS startup requires a considerable amount of financial investments. These investments have tendencies of not yielding the desired returns. Also, as you build your SaaS company, you may take steps which may lead to serious financial losses.
These losses have the likelihood of leading to the closure of your company. Business insurance helps you reduce financial losses and cushion the effect of failed financial investments. This is one of the biggest challenges for the insurance industry.
2. Bodily Injury Coverage
The bodily injury coverage covers the medical expenses of treating your employees and customers who may get injured in the cause of carrying out transactions on your company. This is why you need a personal injury lawyer to help you when filing a personal injury case.
3. Business Continuity
A financial loss or cyber attack may threaten the continuity of your SaaS startup. You may likely suffer from a loss after taking a massive financial step or your company may be the victim of a data breach.
Some of your favourite software as a service companies that are no more in existence today were probably victims of cyber attack. They went other because they didn’t have the resources to sort out the legal consequences of that data breach.
Whichever happens, loss of data may contest the continuity of your business and in such cases a business insurance will be needed to keep your startup running.
4. Coverage For Lawsuits and Legal Claims
It is almost impossible to have happy and satisfied customers all the time especially when these customers can be direct victims of a cyber attack on your SaaS startup. You are going to have to deal with quite a number of lawsuits and legal claims.
A business insurance covers the cost of lawsuits and legal claims which may be brought against your company. Also, you may go against regulatory laws and policies in the cause of your operations. Privacy breaches, copyright infringement, slander and a number of customer dissatisfaction claims may pop up.
These legal claims and fines to regulatory bodies are paid for by your business insurance.
5. Protection of Company’s Image
Even though a good number of the events your startup may suffer from are none of your fault, they have the ability to reduce the public view of your company and even hold the tendency to reduce the value placed on your company.
If your SaaS startup suffers a data breach, every one attached and connected to your company from staff to customers to stakeholders and even the general public are affected.
With a business insurance, you can protect the outlook of your business, retain and secure the outlook of your business and every one connected to it.
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Types of Business Insurance that Your SaaS Startup Needs
There are quite a number of business insurance types that a SaaS startup must have to be able to manage risks and unforeseen circumstances. Some of which are:
1. Business Interruption Insurance
A Business Interruption Insurance compensates a business for the loss it may incur due to an event which slowed down its operation or caused a temporal shut down of business activities.
Your SaaS company may suffer from attacks and breaches that will cause a disruption in your operations. The Business Interruption Insurance will cover the income you may lose during a period like this.
2. Property Insurance
Property insurance as its name implies covers for the property damage or loss from causes such as fire, theft or storm. Damage or loss of inventory, furniture, equipment or signage are paid for by this type of insurance.
There is an exception to what a Property Insurance covers and that is if the loss was caused by natural causes such as floods or an earthquake, you will need an additional policy called a “rider” to cover for such losses.
3. Home-based Business Insurance
While starting out, your SaaS company may be operating from your home as its office. Home-based business insurance can be gotten to secure your company even at that level.
Homeowners’ policies do not cover for businesses starting as home offices like business insurance would do. This is why you should get your SaaS startup a business insurance even though you have some form of home-based insurance.
4. Business Owner’s Policy (BOP)
A Business Owner’s Policy (BOP) consists of all the various types of business insurance your SaaS company needs. From Business Interruption Insurance to Property Insurance to Product Liability Insurance to Home-based Business Insurance to Professional Liability Insurance and so on.
The advantage of getting a BOP is its cost-efficiency compared to having individual coverages. Depending on what your insurance broker deems fit for your business. Here’s why you should have an insurance broker.
5. General Liability Insurance
This is one insurance your business can not do without. A general liability insurance helps to cover the medical expenses of your staff and the legal fees arising from lawsuits and legal claims.
It also covers libel, defamation and slander levelled against your SaaS company. With this insurance policy, you will be taking a lot of worries off your chest as it regards legal fees.
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Do I Need Business Insurance At The Early Stage of My Business?
Emphatically yes, you do! Your SaaS startup needs business insurance at the early stage and other stages of your business.
Unforeseen events such as fire outbreaks, property damage or loss, data breaches and so on can impact your business at any time. You can not tell when these events will hit your business. So why wait till you grow your SaaS startup to a big corporation before acquiring insurance coverage when you can get the best business insurance quote online.
Should your company suffer from any of these unfavourable circumstances at its early stage, what do you fall back to? In our own opinion, the business insurance cover for your SaaS startup should be secured before you start operations.
How much does it cost to get an affordable business insurance quote for SaaS startup in the United States? By comparing multiple small business insurance quotes, you can get a good policy between $46 to 85 USD per month.
If it’s a business car for instance that you want to cover, it’s always more expensive because drivers who use their car for business operations always cover more miles. Business car insurance quotes are always higher than standard cover.
|Policy||Average Cost||Median Cost|
|Business Owners’ Policy (BOP)||$80/month||$62/month|
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The Minimum Business Insurance Coverage Every SaaS Startup Needs
On a basic and minimal level, your SaaS startup should have a business owner’s policy (BOP), general liability insurance, business interruption insurance and cyber liability insurance. These insurance policies will be enough at the early stage of any SaaS company.
You do not need to wait for your SaaS company to become a big corporation before you get insurance coverage for it. Unfavourable circumstances can break out at any time unannounced. Get insurance for your SaaS startup today!