Protect Your Tech Startup with Professional Liability Insurance

How do you pay when you get sued?

Insight from Stripe

Imagine that your latest software upgrade disrupted your client's business. Thanks to you, your client lost tens of thousands of dollars. Your client is going to sue you to recoup lost revenue.

But what if you were protected? Professional liability insurance, sometimes called errors and omissions insurance, can bail you out.

How does this insurance work?

• Pay $1000 to start an annual policy. The policy limits for E&O policies generally start at $1 million. That should be enough when starting out

• As you grow your revenue and employees, the price scales up

• If you get sued, you forward relevant details to the insurance company. This is called opening a claim

• The insurance company will take over responding to the lawsuit. This will most likely result in a settlement to avoid the expense of a trial. Trials are pricey!

Software companies are rarely sued. Insurance companies report that the risk is less than 1% per year. When renewal time comes around, review if you have adequate coverage.