As we continue our discussion about protecting your company against potential loss, we do need to talk about insurance. I know, I know – not very exciting. But, here are some major areas to consider:
Property insurance provides protection against most risks to property, such as fire, theft and some weather damage. Property is insured in two main ways – open perils and named perils. Open perils cover all the causes of loss not specifically excluded in the policy. Common exclusions on open peril policies include damage resulting from earthquakes, floods, nuclear incidents, acts of terrorism and war. Named perils require the actual cause of loss to be listed in the policy for insurance to be provided. The more common named perils include such damage-causing events as fire, lightning, explosion and theft.
Most integrators carry some sort of general liability to insure their work. Liability insurance protects the assets of a business when it is sued for something it did (or didn’t do) to cause an injury or property damage. The amount of coverage a business needs depends on the perceived risk associated with their business. For example, a business that manufactures heavy machinery is at a greater risk of being sued than a company that manufactures linens, and would therefore need more liability insurance.
Errors and Omissions
By the way, if you do a lot of consulting work, you may also want to include Errors and Omissions insurance on the advice you give, or at least put language into your T&Cs that limit your liability (e.g. just recommendations based on information available at the time).
Workers’ compensation provides compensation medical care for employees who are injured in the course of employment. While plans differ between jurisdictions, provision can be made for weekly payments in place of wages and payment of medical expenses.
Sitting down with an insurance broker is ultimately going to provide you with more answers than I can in this blog. But, I often here from Alliance Partners that getting insurance is often difficult because the agents often don’t understand our business. If so, you may want to look into the CSIA organization which offers its members insurance options specifically designed for system integrators.