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Hardware continues to be the largest IT spend for companies year after year, accounting for 30% of the IT budget in 2022. That is a decrease from 33% in 2020 as companies are moving towards cloud-based solutions to accommodate an increasing remote work environment.
Hardware is still essential to the tech industry, whether we are discussing the solutions that have been around for a while now or some emerging technologies, like aerospace or drones. That’s why companies like yours occupy an important place in the market and why insurance carriers developed insurance for tech hardware industry solutions.
The risks you face in your everyday operations determine your insurance needs. Coverage for the tech hardware industry can be complex, so you might need to analyze all your exposures closely and find the best options for your company. That is no easy task, so we’ll try to bring clarity to some basic risks and policies you might need to mitigate those risks for your business.
Why Do Tech Hardware Companies Need Insurance?
You’ve probably heard this numerous times before, but we can’t stress enough how vital business insurance is for your company. Insurance provides a financial safety net that helps your business survive the unexpected circumstances that could devastate your operations and lead to financial ruin.
There are a few key reasons why tech hardware companies need insurance:
- To protect against product liability risks
- To insure against loss or damage to company equipment
- To cover the cost of recovering from a cyberattack or a data breach
- To protect the company’s intellectual property from theft or infringement
- To hedge against other general business risks such as fire, flood, or earthquake damage
While not every tech hardware company will face all of these risks, it’s important to have a robust insurance program in place to protect against as many potential threats as possible. By doing so, you can help ensure that your business can weather any storms that come your way.
Insurance for Tech Hardware Industry: What Policies Do You Need?
Every tech hardware business has a unique risk profile, and you want to tailor your coverage to your needs. Let’s look at the policies experts recommend you should get for your tech hardware company.
General Liability Insurance
Commercial general liability insurance is an insurance policy that businesses purchase to protect themselves from financial damages that may result from claims of third-party injuries or property damage.
Businesses of all sizes need some form of general liability insurance, as it can help protect you from expensive lawsuits or damages that could put you out of business entirely. For example, if someone was to slip and fall at your business, they could sue you for their medical expenses. Or, if a fire were to damage your client’s property in your office building, this policy would cover the cost of repairs.
You can add many endorsements to your general liability policy, so it’s important to work with an insurance agent to find the right one for your business. The amount of coverage you need will depend on the size and type of business you have, as well as your industry.
Product Liability Insurance
Product liability insurance protects your business against claims arising from injuries or damage caused by products you sell. If one of your products causes injury or damage, product liability insurance can help cover the cost of compensating the victim and defend you in court if you get sued. It would also cover any settlements if both sides agreed to settle the case outside the courtroom.
Product liability insurance is vital for any business that manufactures, sells, or supplies products. As a technology hardware business, you should strongly consider purchasing this policy for your company, as your product could harm a customer or somebody from the supply chain in case of a malfunction.
There are different types of product liability insurance, so choosing a policy that suits your business needs is essential. If your product is particularly risky, you should increase your policy limits to respond to all your exposures.
Workers Compensation Insurance
Workers Compensation insurance protects employees who are injured or become ill as a result of their job. The insurance provides benefits to employees to help cover medical expenses and lost wages. Workers compensation is typically required by state law in all states except Texas, and employers are responsible for providing coverage.
Workers compensation insurance can help cover the costs of medical care and lost wages when an employee is injured or becomes ill due to their job. In the event of death, the insurer will compensate the worker’s family. In some instances, employees may be covered by workers compensation even if they are not working at the time of the injury or illness, such as if they are on break or traveling for work.
Employment Practices Liability Insurance
Employment practices liability insurance (EPLI) is a type of insurance that businesses purchase to financially protect themselves from employment-related lawsuits. Experts recommend that every business owner that has employees should buy this coverage for their company.
This type of insurance can help cover the costs of defending against claims of discrimination, sexual harassment, wrongful termination, and other workplace legal issues.
Many employers purchase EPLI as part of a comprehensive risk management plan to help protect their businesses from the potentially devastating financial impact of an employment-related lawsuit.
Tech E&O Insurance
If you are providing professional services that involve the use of technology, consultation about your product, or management of hardware infrastructure, it’s important to consider the risks associated with your work and make sure you have the proper insurance coverage in place.
The risks associated with providing professional services increase as technology becomes increasingly complex. Tech E&O insurance can help protect your organization from potential financial losses resulting from claims of negligence, errors, or omissions in the performance of your professional services. It also responds to breach of contract, copyright infringement, or defamation claims.
Technology errors and omissions insurance can help cover the costs of defending against these types of claims, including legal fees and settlements. It can also provide protection for your business in the event that a claim is successful.
Cyber Liability Insurance
Cyber liability insurance coverage helps protect businesses from losses due to cyberattacks, data breaches, and other online threats.
Cyber liability insurance can help cover the costs of investigating and responding to a data breach and any legal fees and damages that may be awarded in a lawsuit. It can also help cover the costs of restoring lost or damaged data and reimbursing customers for any fraudulent charges they may have incurred due to the breach.
While no one is immune to cyberattacks, small businesses are particularly vulnerable because they often lack the resources to secure their systems and data effectively. On the other hand, larger companies stand to lose a lot in a successful cyberattack, proving that the coverage is essential for every business that conducts even a part of their operations online.
Inland Marine Insurance
If you transport your product to distributors or directly to customers, you should consider buying inland marine insurance that provides protection for goods and property that are transported by land. Whether you use a truck, train, or some other vehicle to transport your goods, you should ensure that you have the proper coverage in place.
Inland marine insurance is vital for businesses because it protects against lost or damaged goods in transit. This type of insurance provides coverage against natural disasters, accidents, theft, and other risks. Many businesses rely on inland marine insurance to cover their shipments from start to finish.
Depending on your business characteristics and risk exposure, an experienced insurance broker could help you determine what policies you need and the amount of coverage necessary to respond to all your risks. Those factors will also determine the cost of insurance policies for your tech hardware business. For example, your industry, revenue, company size, and claims history are a few determinants of your policy premiums.
If you are ready to get online quotes for your business insurance policies, you can start by creating a profile on Embroker’s digital platform. If you need more information about insurance for tech hardware industry, you can always contact one of our brokers for consultation.
The 2023 edition of InsureTech Connect Vegas was a wild one. Big booths, two puppy playpens, a beer garden (that we definitely didn’t explore), and some of the biggest players and innovators in the insurance space all gathered in Mandalay Bay for an incredible week. Our presence at this year’s ITC was a big step […]