Saas Business Insurance Policies and Requirements

As a SaaS business owner, you're likely no stranger to the importance of insurance. But did you know that SaaS business insurance policies can vary depending on your specific business needs? For instance, if you have a team of employees, you'll need to consider workers' compensation insurance to protect them in case of on-the-job injuries.

Liability insurance is also a must-have for SaaS businesses, as it protects you against lawsuits and financial losses in case of data breaches or other cyber-related incidents. In fact, a recent study found that 60% of SaaS companies have experienced a data breach, making liability insurance a crucial investment.

If you're just starting out, it's essential to understand the minimum insurance requirements for your SaaS business. For example, in the United States, most states require businesses to have a minimum amount of liability insurance, typically $500,000 to $1 million.

Technology errors and omissions insurance, also known as tech E&O, is a crucial policy for SaaS businesses, with an average monthly cost of $91.

Cyber insurance is another essential coverage, protecting against data breaches and cyber attacks, with a median monthly cost of $153.

General liability insurance provides protection against accidents and injuries, with an average monthly cost of $31.

Fidelity bonds are also important, with a median monthly cost of $88, and are often required by clients who handle sensitive information.

Workers' compensation is a necessary policy for businesses with employees, with a median monthly cost of $40.

Commercial auto insurance is also available, with a median monthly cost of $198, but is typically only necessary for businesses that use vehicles for work.

Here are the top insurance coverages bought by SaaS businesses and their average monthly costs:

Technology errors and omissions insurance, also known as tech E&O, is a crucial policy for SaaS businesses, with an average monthly cost of $91.

Cyber insurance is another important coverage, protecting businesses from cyber attacks, and its average monthly cost is $153.

General liability insurance is a must-have for SaaS companies, with an average monthly cost of $31.

Fidelity bonds are also a common policy, with an average monthly cost of $88.

Workers' compensation insurance is a required policy in many states, with an average monthly cost of $40.

Commercial auto insurance is another policy SaaS businesses may need, with an average monthly cost of $198.

Here's a breakdown of the average monthly costs for these key policies:

The cost of insurance for SaaS businesses can vary, but there are some general guidelines to keep in mind. The median cost of policies for SaaS companies is a better estimate than the average, as it excludes outlier high and low premiums.

Technology errors and omissions insurance, or tech E&O, is a common policy for SaaS businesses, with an average monthly cost of $91. Cyber insurance is another key policy, with an average monthly cost of $153. General liability insurance is also important, with an average monthly cost of $31.

Fidelity bonds are often required for SaaS businesses, with an average monthly cost of $88. Workers' compensation is another necessary policy, with an average monthly cost of $40. Commercial auto insurance is also important for SaaS businesses that use vehicles for work, with an average monthly cost of $198.

The cost of SaaS insurance ultimately depends on several factors, including turnover, the number of employees, and the nature of the services provided. Startups should prioritize conservative protections when applying for cover, as this can help keep costs down.

Here are the average monthly costs for key SaaS insurance policies:

SaaS businesses spend an average of $91 per month on tech errors and omissions insurance, which bundles errors and omissions insurance and cyber insurance into one policy.

This combined coverage protects small businesses against claims of professional negligence, such as a service outage causing a client financial loss and a lawsuit. Tech E&O includes third-party cyber insurance, adding extra protection in case your SaaS services unintentionally cause a data breach or cyberattack at a customer's company.

The average E&O insurance policy for SaaS companies has a policy limit of $1 million per occurrence and $1 million aggregate, with a deductible of $2,500.

General liability insurance for SaaS companies costs an average of $31 per month, or $371 per year, and covers common third-party risks like customer property damage or bodily injury.

A general liability policy can pay for lawsuits related to copyright infringement and advertising injury, including slander and libel. If a competitor sues for a disparaging statement made by an employee on social media, a general liability policy would cover the legal costs.

The cost of general liability insurance is based on factors like the types of services offered, annual revenue, company size and location, and subcontractors or additional insured endorsements.

Cyber liability insurance can cover the cost of incident response, cyber extortion, forensic investigation, and regulatory fines in the event of a cyberattack.

You can get affordable business insurance for your SaaS company in just three easy steps with TechInsurance. Fill out a free online insurance application, compare custom quotes from top-rated U.S. insurance companies, and choose the best policies for your business.

The cost of SaaS insurance varies depending on factors like the number of employees, revenue, and the nature of your services. This means there's no fixed figure, and you'll need to work with an insurance partner who understands your unique needs.

TechInsurance's licensed insurance agents can help you navigate these factors and find the right coverage for your business. With their help, you can download a certificate of insurance for proof of coverage and get insured within 24 hours of applying for quotes.

You can also consider the Embroker Startup Program, which offers market-leading D&O, EPLI, E&O, and cyber insurance in minutes. This program is designed specifically for venture-backed SaaS companies and can provide you with the protection you need to grow your business.

Commercial auto insurance is a must-have for SaaS companies with company vehicles, as almost every state requires it. This type of insurance helps cover property damage costs and medical bills if your business vehicle is involved in an accident.

You can expect to spend around $198 per month, or $2,375 yearly, on commercial auto insurance. This cost can vary depending on several factors, including your employees' driving records and policy limits.

The cost of commercial car insurance also depends on the number of vehicles you own and their value. If you have multiple high-value vehicles, your insurance premiums will likely be higher.

Commercial auto policies can help pay for costs related to vandalism, weather damage, and theft. This coverage is essential for protecting your business assets and financial well-being.

Affordable business options are crucial for SaaS companies, and there are ways to get affordable business insurance. TechInsurance makes it easy for SaaS software companies to obtain affordable business insurance in just three easy steps.

You can fill out a free online insurance application with details about your business, compare custom quotes from top-rated U.S. insurance companies in real-time, and choose the best policies for your business and pay the premiums to begin coverage. TechInsurance's licensed insurance agents are available to help answer questions about your liabilities, state insurance requirements, risk management strategies, and the right types of coverage for your insurance needs.

The cost of SaaS insurance can vary depending on several factors, including the number of employees, revenue, the nature of the company's services, its claims history, and the volume of PIIs stored. Location also plays a role, as each state has different requirements and legal characteristics that affect the price of coverage.

If you're a venture-backed SaaS company, you can get market-leading D&O, EPLI, E&O, and cyber insurance in minutes through the Embroker Startup Program. This program offers instant quotes, making it easy to get the insurance you need quickly.

Here are some key factors to consider when choosing a business insurance provider:

Certificates are a crucial aspect of B2B models, and it's common for businesses to request them.

You'll often need to provide certificates of insurance to assure your counterparties that you have the necessary insurance covers in place. Professional indemnity combined with cyber liability insurance are usually the most important covers required.

Having the right insurance covers in place can give your business a competitive edge and provide peace of mind for your clients.

Customer reliance is a double-edged sword for Enterprise and SaaS companies. They rely heavily on their customers to keep coming back for more, which is why product downtime is completely unacceptable.

Most of the money made in the space comes from recurring revenues generated by existing clients. Customers lose money and companies get blamed for those losses when the platform goes down.

Even if your product is working, but it's not working up to certain customers' standards, they might still sue you.

A good Errors and Omissions (“E&O”) insurance policy will cover you for losses related to product failures or malfunctions and customer-satisfaction-related lawsuits.

You can have the best product on the market, but that doesn’t stop over-demanding customers from bringing lawsuits.

SaaS business insurance is a must-have to protect against various financial shocks.

General liability insurance, which costs an average of $31 per month, covers common third-party risks such as customer property damage or bodily injury.

Cyberattacks can have severe financial repercussions, which is why cyber liability insurance is crucial, especially with the rise of malware attacks and phishing scams.

Tech E&O insurance safeguards tech companies from legal liabilities stemming from errors, omissions, or negligence, such as software malfunctions or data breaches.

The top insurance coverages bought by SaaS businesses and their average monthly costs are:

A business owner's policy (BOP) can bundle general liability insurance with commercial property insurance at a lower cost, averaging $47 per month.

Directors and Officers insurance is a must-have for companies, providing financial protection to directors and board members against civil liabilities, regulatory proceedings, and criminal allegations.

As a director, you can be held personally liable for decisions made on behalf of the company, which is why this insurance is essential.

Directors and Officers insurance is commonly requested by new and existing investors, who want protection for their shares.

Fidelity bonds are a type of surety bond that protects clients by reimbursing them in the event of employee theft, fraud, or forgery.

The average cost of a fidelity bond for SaaS companies is $88 per month, or $1,054 annually. Some clients may mandate a bond in order to sign a contract with them, especially those in the financial services industry.

A fidelity bond can reimburse clients for illegal electronic funds transfers and unapproved credit card purchases. This includes cases where an employee commits forgery.

The cost of a fidelity bond is a certain percentage of the total bond amount. This amount must be paid back to the company that issued the bond.

Directors and Officers are at risk of being held personally liable for decisions made on behalf of the company.

Directors and officers insurance provides financial protection against civil liabilities, regulatory proceedings, and criminal allegations.

This type of insurance is commonly requested by new and existing investors, who want protection for their shares.

Directors and officers insurance can be a vital safeguard for individuals who accept roles as directors, senior managers, and board members.