Web Hosting Service – Know Your Insurance Needs
Web hosting services, such as Bluehost, HostGator, GoDaddy, Lunarpages, and DreamHost, face many daily risks. One of the biggest risks is the data breach. In 2018, over 6500 data breaches were reported across the Internet, according to Risk Based Security. These breaches impacted thousands of Internet user accounts. While the forecast for web hosting is looking better every day, the risk of a data breach is still extremely high, which is why IT insurance coverage is more important now than ever.
What Is Web Hosting Services And How Risky Is It?
Web hosting services are exactly as its name entails. It is a business that hosts websites, providing both Internet access and storage. Security and reliability are two qualities webmasters look for in web hosting services. All web hosting services know the importance of topnotch security, which is essential to protecting websites and content.
Data breaches are a major problem for web hosting services. Fortunately, there are security programs and frequent updates that create a barrier between web hosting services and online hackers. With this said, all web hosting companies need to be insured to the fullest. A customized insurance policy for a web host would look like this, a combination of E&O, cyber liability, fidelity bonds, and GLI. All of these coverages are necessities for web hosting companies and their clients’ websites.
E&O (Errors And Omissions Insurance)
E&O insurance coverage protects web hosting companies from financial losses associated with data breaches, third-party lawsuits, and unreliable uploading and downloading speeds. Canadian hosting companies face many struggles when it comes to speed, security, and reliability, all of which are essential to hosting websites.
E&O insurance kicks in when a claim is filed against an insured web hosting company. The lawsuit may be associated with a data breach, negligence, and oversight. Lawsuits never end in the hosting company’s favor because there are expenses that must be covered regardless of the outcome. At this point, legal fees are going to be your biggest expense, followed by a monetary settlement and a potential monetary court judgment.
E&O insurance is vital in these situations. It will cover most or all of your legal fees, monetary settlement, and court judgment. This policy covers financial loss associated with the following:
- Negligent mishap
- Failure to deliver on speed, reliability, and security
- Errors or mistakes
- Unintended oversights
- Third-party data breach claims and websites
The IT industry is filled to the brim with scam artists and hackers, with hackers being the worst. To protect and serve are the two main goals for web hosting companies.
Cyber Liability Insurance
Cyberattacks are always going to be a major problem for web hosting companies, webmasters, and e-commerce stores. Every website is at risk, whether you want to believe it or not. Data breaches have crashed and destroyed many websites, which is why webmasters rely on their hosting services to deliver top notch security with frequent updates.
Cyber liability insurance is crucial for web hosting companies. This policy will protect your company from third-party claims and lawsuits associated with successful cyberattacks and data breaches.
Cyber liability insurance covers the following:
- Legal fees
- Lawsuit settlements
- Court monetary judgments
Just the legal fees alone are enough to send some web hosts into bankruptcy. With this protection, you may only need to pay a quarter or half of the overall expenses. This alone could save your business from financial and reputation devastation.
Employee theft is real. And, it can happen to your company at the drop of a hat. While web hosting companies utilize excessive hiring practices, there are risks involved in the process. There comes a time in every web hosting company’s business tenure when an employee theft is brought to the surface.
Fraudulent employees are notorious for running illegal schemes. This is especially true for employees who work in the accounting, payroll, and human resources departments. These are the employees who have access to company funds. Conniving employees can concoct a scheme from scratch within only a few dollars at their disposal. So, never think your company is 100 percent safe because no company is safe from a thief.
Fidelity bonds protect web hosting companies from financial losses associated with employee theft, whether it be money, physical property, or data. All thefts will leave a devastating impact on companies and their honest employees.
While banks and other financial institutions are always going to have the highest employee theft risks, all companies, including web hosts are at risk. Even if the thief stole as little as a $1, theft is theft in Canada. The first time maybe $1, the next time will be more. The process will continue until the employee steals your company blind, forcing you into bankruptcy.
Fidelity bonds will compensate you for financial loss associated with employee theft.
GLI (General Liability Insurance)
General Liability Insurance, better known in the world of insurance as GLI. This insurance policy protects web hosting businesses from financial losses associated with third-party accident and property damage claims.
All web hosting companies should be aware of third-party accident risks. An accident as minor as a tiny finger laceration can lead to a lawsuit. Some consumers are always on the lookout for a new opportunity to sue a web hosting company, any company for that matter. So, your company is at risk even though most of your business operations are done online.
GLI kicks in when a client files a claim against your insurance policy. This will call for a full investigation to determine if your company is at fault. If it is determined your company was not responsible for the accident, you may scathe by unhurt. If you are determined to be at fault, your company will be responsible for the plaintiff’s medical expenses and property repairs or replacement. If the injury was severe, the plaintiff may need to undergo years of physical and restorative therapies, of which you will be responsible for as well.
If your company is covered under a GLI policy, your insurer will take over the responsibility of all or most of the plaintiff’s expenses. In most cases, GLI policies will cover about 75 percent of a lawsuit judgment or out-of-court settlement.
All Canadian web hosting services are required to obtain and carry GLI coverage. The coverage will vary depending on your location. For example, Quebec companies are only required to have a $50,000 GLI policy.
Worker’s Compensation Insurance
Canadian workers face many daily struggles and risks. Every time, an employee enters a workplace, his/her injury and illness risks increase drastically. Fortunately, web hosting generally does not require heavy lifting or other types of physical labor. But, it does require repetitive movements. For web hosting employees, the biggest medical threat is carpal tunnel syndrome. This condition is caused by repetitive movement of the fingers and wrists.
Slips and falls are frequently reported in the workplace, which is where worker’s compensation comes into play. This insurance policy covers expenses associated with work-related injuries and illnesses. It will pay the injured or sick worker’s medical bills, rehabilitation costs, missed wages.
Worker’s compensation offers the best of both worlds. While it is specifically designed to protect workers who are injured in the workplace from financial devastation, it also protects the employer. It covers legal expenses related to workplace injuries and illnesses. This alone could prevent you from dipping into your company savings to cover the injured worker’s medical expenses.
Commercial Auto Insurance
Commercial auto insurance is mandatory for all Canadian businesses. This rule only applies to companies that operate a fleet of work vehicles. Web hosting companies generally do not need a large fleet of work vehicles. The number of work vehicles will depend on the size of your web hosting business, the number of employees, location, and coverage area.
It may be necessary to dispatch an employee out to a client’s place of business to conduct a computer security update or make minor repairs. In these cases, your company will need to supply a responsible employee with a company vehicle.
Commercial auto insurance covers motor vehicle accidents involving one or more vehicles. If one of your IT technicians is involved in a collision during work hours, your company will be responsible for the damage.
This policy will cover your damaged work vehicles and if the employer is determined to be at fault, the policy will also cover the other drivers’ vehicles and medical expenses. The great benefit of commercial auto insurance is it also covers theft, vandalism, and weather damage.
You biggest asset in life is your earning ability. If you are unable to work, you will need to rely on either your savings or borrow money to sustain your lifestyle. When these unfortunate circumstances occur, dependents and spouses are also impacted financially and emotionally.
Disability insurance coverage will provide you a monthly income benefit, usually totaling 70% to 80% of your income, when you are unable to work for a period of time due to injury or illness.
Types of disability insurance:
- Long-Term Disability Insurance (LTD)
- Short-Term Disability Insurance
- Key Person Disability Insurance
- Self Employed Disability Insurance
- Mortgage Disability Insurance
- Temporary Disability Insurance
- Supplemental Disability Insurance
Why Do Web Hosting Companies Need To Be Insured?
It cannot be stressed enough the importance of insurance for web hosting companies. Data breaches, workplace injuries, employee theft, vandalism, weather damage, and loss of client data are just to name a few of the risks web hosting companies face on a daily basis.
How Much Are Insurance Premiums?
Each insurance policy has a monthly or yearly premium. By paying yearly, you can save anywhere between 3 to 10 percent, depending on the insurer. The best way to determine the premiums for a web hosting insurance policy is to request a quote. ProfessionalsCoverage is here to assist you with this process. Remember, we are just a phone call away from a quality insurance plan for your company.
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Helpful resources for IT professionals and their companies
- Why do I need IT insurance for my business?
- What types of insurance do I need for my IT business?
- Will I be legally required to get insurance to operate as an IT company?
- How do I get the cheapest rate possible as an IT business?
- As an online business, what liability insurance coverages will I need?
- How do I handle a lawsuit that is frivolous or completely fake?
- Want to cancel insurance for your IT Company? Here are reasons to consider!
- Using a change control board for tracking.
- Acceptable use policy – Every business needs it and here is how to write one!
- Want to start an IT consulting business? Awesome! Here is a small guide!
- How much insurance will I need to operate my tech company?
- I am a sole proprietor, how will business insurance work for my IT business?
- How do I choose the right legal corporate structure for my technology company?
Other types of IT Businesses we insure:
If your specializing is not mentioned below, have no worries. Our insurance markets can provide liability coverage for the majority of information technology related businesses.
- Telecom Cabling Installers Insurance
- Network Designer Insurance
- Cyber Security Insurance
- Business Intelligence Insurance
- Data Analysis Insurance
- Database Administration Insurance
- Web Hosting Service Insurance
- Network Security Company Insurance
- Mobile App Developers Insurance
- IT Staffing Agency Insurance
- IT Project Management Insurance
- IT Consultants Insurance
- Data Scientist Insurance
- Computer Repair Business Insurance
- Digital Marketing Agency Insurance
- SEO & SEM Consultants Insurance
- Software Developers Insurance
- Technical Writers Insurance