Initiating a start-up business is a major professional commitment that can lead you to a path of immense financial success and a well-respected entrepreneurial reputation. Indeed, you never know whether your debut business idea could develop into the next big thing and reap significant profits for years to come. What’s more, recent data revealed that start-up organisations are on the rise. In fact, the number of new companies registered in the United Kingdom increased by 5.7 per cent in 2018, totalling a record-high of over 660,000 start-ups.
However, while the prospect of developing a successful start-up can be exciting, you shouldn’t let your hopes for the future blind you from the long list of hardships that come with getting a new business off the ground. In fact—despite the UK being a ‘hub’ for start-up organisations this past year—recent research found that 60 per cent of the nation’s new businesses fail within their first three years, with 20 per cent closing their doors in less than 12 months.
Especially in the realm of tech start-ups, your new organisation will face a range of evolving risks that could cause serious financial, legal and reputational consequences. With this in mind, it’s crucial that you protect your tech start-up with top risk management methods. Regardless of what new technology or app your business creates, the best protection you can have is robust insurance cover. Use this guidance to review important insurance solutions that your organisation needs to avoid becoming another failed start-up statistic.
Insurance Solutions for Tech Start-ups
Whether it be online or in the office, risks can present themselves nearly anywhere within your tech start-up. Fortunately, analysing your organisation’s top risks and purchasing the proper cover to combat these concerns can provide ultimate peace of mind against a business disaster. Consider the following insurance solutions:
- Professional indemnity insurance will protect your start-up against any claims of negligence that result from perceived errors or omissions in your professional services. For example, a technology-based company could be found negligent if they unknowingly transfer a virus to clients through their online services.
- Public and products liability insurance provides cover in the event that your organisation’s products or services are responsible for any bodily injury, harm or property damage to another client or the public. For example, a consumer could suffer bodily injury or harm after using a ride-share app and being ‘matched’ with an unqualified driver that causes an accident.
- Employers’ liability (EL) insurance will protect you against the cost of compensations for your employees’ injuries or illnesses caused by work-related activities. For example, employees at a technology-based company could suffer complications from prolonged display screen equipment exposure, such as carpal tunnel syndrome, eyestrain or back and neck pain. Despite the fact that you may be a lean start-up, all businesses are required in most circumstances to purchase EL cover as soon as they start employing people. You can be fined £2,500 every single day you are not properly insured, and you can also be fined £1,000 if you do not display your EL certificate or make it available to inspectors when they ask.
- Legal expenses insurance can offer protection in the event of any defence costs that your start-up incurs from a legal dispute or claim.
- Building and contents insurance protects your organisation’s property and its contents in the event of unexpected damage (eg vandalism), theft or natural disaster. In addition, consider business interruption cover as an extension to your policy, which offers protection against your start-up’s loss of income after a disaster and during the recovery process. Your organisation might also want to add high-risk stock insurance to your policy to protect against the theft or damage of high-value items on-site, such as computers, mobile phones and other advanced technology or smart devices.
- Directors’ and officers’ liability insurance provides cover in the event that your organisation suffers losses due to the wrongful acts or negligence of senior-level leadership. This form of cover is vital for technology-based organisations, seeing as strict regulations like the GDPR hold senior management responsible for various business disasters—both online and in person.
- Cyber-insurance protects against damages that result from threats to your organisation’s technology or data—this includes stolen or damaged information, liability and recovery costs. This form of cover is especially crucial for technology-based organisations that rely heavily on cyber-assets and data to conduct necessary business operations. In the same way that a fire can devastate a traditional business, a cyber-breach or attack can be ruinous for your start-up. With no access to your start-up’s primary digital services, or no access to your crucial online store, your new business will lose valuable early customers and likely never recover.
As a tech wizard, it can be easy to focus on your lofty entrepreneurial goals and forget the very real threats facing your fledgling business. Remember that no tech expertise in the world can protect your start-up from ever-present threats like cyber-disruption, natural disasters, faulty products or negligent advice. No matter how revolutionary your idea is, it can still easily be undone by everyday, real-world threats.
For additional guidance in determining the best insurance solutions for your tech start-up, contact Willis IRM today.