Business Insurance for Web Development Businesses

Business Insurance is designed to protect a business owner’s financial assets and is an essential investment for a web development business.

This article will cover the main insurance coverage for web development businesses, general liability insurance, and suggest other policies that are suitable for this business.

The cost of business insurance varies greatly from one business to another. The only way to find your true cost is to get a quote.

General Liability Insurance For Web Development Businesses

All businesses, regardless of industry, face risks that should be covered by insurance. The most common and comprehensive type of policy business owners invest in is general liability insurance.

Some of the risks general liability insurance covers are:

  • Bodily injury
  • Property damage
  • Medical payments
  • Legal defense and judgment
  • Personal and advertising injury

While businesses aren’t legally required to carry general liability insurance, operating without it is extremely risky. If your business is sued, you could end up facing fees totaling hundreds of thousands of dollars (or more). Having a sufficient general liability insurance policy in place to help compensate for these damages is the only way to prevent this type of event from devastating your business.

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Business insurance is massively important to all businesses, whether large or small. Getting a quote will help you understand which coverages are right for your business and how much it will cost.

Check out our review of the Best Small Insurance Companies.

Common Situations That General Liability Insurance May Cover For A Web Development Business

Example 1: A client brings some documents into the office and fails to notice the cables strung across the floor. He trips on them and falls, injuring himself and requiring medical attention. The fees for his medical treatment will be covered by your general liability insurance policy.

Example 2: One of your competitors determines that your new logo, which you have been using on all your latest marketing materials, is too similar to theirs. The competitor files a lawsuit against your company, demanding damages for copyright infringement. Your general liability insurance policy will pay for your legal defense as well as for a settlement if the case is decided out of court.

Example 3: One of your team members visits a client’s office for some hands-on guidance on how to maintain their website. While there, your employee knocks over a cup of coffee onto an expensive laptop, causing extensive damage. The general liability insurance policy you carry will pay for the replacement cost of the client’s equipment.

Of course, this is not an exhaustive list of perils a general liability insurance policy will cover, and some conditions may result in a particular peril not being covered. It’s always best to talk to your agent in-depth about the specifics of your policy to avoid blind spots in coverage.

Learn more about the risks covered by general liability insurance.

Cost Of General Liability Insurance

The average web development business in America spends between $400-$700 per year for $1 million in general liability coverage.

Check out the chart below for a snapshot of average general liability insurance expenditure across a variety of industries:

Graph showing average price of general liability insurance prices per industry

Several factors will determine the price of your policy. These include your:

  • Location
  • Deductible
  • Number of employees
  • Per-occurrence limit
  • General aggregate limit

You may be able to acquire general liability insurance at a discounted rate by purchasing it as part of a business owner’s policy (BOP) rather than as a standalone policy. A BOP is a more comprehensive solution that includes multiple forms of coverage, such as business interruption and property insurance.

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Other Types Of Coverage Web Development Businesses Need

While general liability is the most important type of insurance to have, there are several other forms of coverage you should be aware of. Below are some other types of insurance all web development businesses should obtain:

Commercial Property Insurance

Your web development work requires functional, current tech—which is costly to buy and costly to replace. If your computer equipment and other office equipment is damaged in an unexpected event, like a fire, a commercial property insurance policy would pay for the replacement of the equipment and other supplies. With your equipment replaced, you can quickly get back to serving clients and generating revenue.

Data Breach Insurance

The clients you work with entrust you with a lot of important information. Should that information become compromised by cybercriminals, the damage to the client can be considerable. Should the client take legal action due to the stolen user data, your data breach insurance will cover your legal fees. It will also cover the cost of paying a settlement if your case is settled out of court. 

Types Of Coverage Some Web Development Businesses May Need

In addition to the policies outlined above, there are a few other types of coverage your web development business may require depending on certain aspects of your operations. Some of these might not apply to you, so be sure to ask your agent which policies are right for your business.

Workers’ Compensation Insurance

If your web development business has employees, workers’ compensation insurance will ensure that you are able to cover the costs of their medical care if they are injured while performing job-related activities. It also provides some coverage for lost wages if the employee is unable to work due to the injury. Workers’ compensation insurance coverage is required by most states for companies have part-time or full-time employees.

Home-Based Business Insurance

If you run your web development business out of your home, it is possible that your homeowner’s insurance will not cover accidents due to business-related activities. It is important to speak to the insurance provider of your homeowner’s policy to verify what kind of coverage you have related to your business. If your homeowner’s policy does not cover you, then you can get a home-based business insurance policy as part of a business owner’s policy or possibly as an extension to your existing homeowner’s policy.

Additional Steps To Protect Your Business

Although it’s easy (and essential) to invest in business insurance, it should not be your frontline defense. Yes, insurance will compensate for your business’ financial losses after an incident occurs, but it’s much better to avoid losses altogether.

With this in mind, here are several things you can do to better protect your business:

  • Use legally robust contracts and other business documents. (We offer free templates for some of the most common legal forms.)
  • Set up a limited liability company (LLC) or corporation to protect your personal assets. (Visit our step-by-step guides to learn how to form an LLC or corporation in your state.)
  • Stay up to date with business licensing.
  • Streamline your business’ internal processes. This will remove unnecessary variables from common tasks and create a safe, consistent environment for conducting business.
  • If your business is an LLC, look into LLC Insurance.

Steps After Getting Business Insurance

Depending on where you are in your business building process, here are some other actions you may need to take before getting started:

Business Insurance is the Best Way to Protect Your Business

If you're starting a new business, then you need business insurance. It's as simple as that. The protection offered by an LLC will protect your personal assets, but your business's assets are still open to liability in the case of a lawsuit or other loss.

Be sure that everything you've built is safe by getting business insurance.

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What is included in a business owner’s policy?

A typical business owner’s policy includes general liability, business interruption, and commercial property insurance. However, BOPs are often customizable, so your agent may recommend adding professional liability, commercial auto, or other types of coverage to your package depending on your company’s needs.

What is the difference between business insurance and general liability insurance?

"Business insurance" is a generic term used to describe many different types of coverage a business may need. General liability insurance, on the other hand, is a specific type of coverage that business owners need to protect their assets.

Do I need insurance before I start a business?

You should invest in insurance coverage for your business before your first interaction with a customer. Although the cost of insurance may seem high for a brand new business, it’s best to be proactive when it comes to protecting your assets. After all, you can’t buy insurance to cover a loss that has already occurred.

Will insurance protect my business from everything?

Not necessarily. Certain exceptions may be written directly into your policy, and some perils may be entirely uninsurable. Be sure to discuss the scope of your policy in-depth with your agent to avoid being blindsided by holes in your coverage.