In October 2020, Apple announced its line-up of products that will support 5G, heralding a new era of technological advancement. While your tech start-up might not have the muscle of Apple just yet, your product or service could be solving equally important problems not yet identified in the market. And why not? Wi-Fi was famously invented here in Australia!
There are inherent risks when starting any new business, but from a liability standpoint, various insurances can greatly assist in mitigating risk. For Australian tech start-ups in particular, the following 4 insurance essentials are critical ones to keep in mind:
1. Secure a Comprehensive Information Technology (IT) Liability Policy
Almost every business is required to have Public Liability insurance, but tech start-ups also need to consider cover from an IT standpoint. From crime and defamation, to unintentional infringement of intellectual property, ensuring your IT Liability policy is comprehensive will help in mitigating risk. An IT Liability policy helps protect businesses against claims relating to failure of their products, advice or services. In many cases, a Professional Indemnity policy will not respond to losses related to the supply of goods, while Combined Liability policy can exclude pure financial loss, where personal injury or property damage has not taken place. To reduce uncertainty and maintain comprehensive coverage, an IT Liability policy is tailored to cover Professional Indemnity and Combined Liability under one umbrella. When placing an IT Liability policy, be sure to take note of any extensions and exclusions – these may be relevant in the event of lodging a claim.
2. Prioritise Cyber Insurance
It is estimated that cybercrime costs Australian businesses $29 Billion each year. Together with the rise of remote working practices and the IT vulnerabilities this has revealed, we expect cyber security to remain business critical for years to come. There are many Tips for Remote Working, Cyber Security and Avoiding Email Scams, but even the most tech savvy individuals can fall victim to cybercrime. A data breach can prove costly not only for your clients, but for the reputation, operations and ongoing viability of your tech start-up. In the event of a data breach, a robust Cyber Insurance policy can bear the cost incurred to reduce your future risks, resume business and, when needed, pay retribution for your clients’ losses. Learn more about cyber insurance and how it works in this case study on Australia’s education sector.
3. Review Limits & Sub-Limits of Liability
With limits of liability varying from $500,000 for cyber coverage to $10M for IT, having the correct coverage limits in place is crucial to avoiding being under or over insured during the policy period. Recommended levels of coverage are often advised based on any contractual liabilities between you and your clients. The size and annual turnover of your business can also help in determining the most comprehensive, and competitive policy for your start-up.
*Be mindful of sub-limits that form part of these policies, as the extensions that form part of the policy may not cover the full indemnity. For example, while an IT Liability policy may cover up to $1M for any one claim and $2M in the aggregate during the policy period, there may be a $250,000 sub-limit for product recall. Any financial costs above the sub-limit could see your start-up as financially responsible.
4. Enlist the Advice & Support of a Dedicated Broker
There are many variables that inform a robust insurance policy, and it will take time to tailor these to your start-up’s particular needs. A quality insurance broker does more than place your insurance policies, they identify risks and manage your entire portfolio of risk solutions.
The tips outlined above cover the basics of risk-protection for tech start-ups, but a dedicated, quality broker will support you in building a highly customised, blue-chip protection portfolio for your business. In turn, this frees you up to focus on what you do best – building your business!
We’re with you all the way
To find out how Honan can help support and protect your start-up, please reach out at any time. We’d love to hear from you!
Client Executive – Global
Discover more about how cyber insurance works in this case study on Australia’s education sector.