How to know if a business insurance will cover your claims?

2 points by wheresmycraisin 5y ago ↗ HN

I’m shopping for error & omission and cyber liability coverages for my small software business with an annual revenue in the low six figures. I both develop and sell my software myself. I contacted two different insurance brokers, and got two quotes for the same insurance carrier (Hiscox). Both quotes are for the same coverage level (1 million liability and 2,500 deductible), but the quote prices are drastically different. I’m wondering which one to choose and what would have caused such a difference.

The first broker quoted $600 and was able to generate the quote right away after asking me a short questionnaire over the phone. The second broker quoted $3,600 after I filled out a lengthy PDF application and waited for a week. (The second broker also quoted me another carrier – CFC – for $2,000.)

The $600 quote is tempting, but I want to make sure I’m actually getting a sound insurance with it. I’m worried that something could be wrong with the first insurance quote, like they didn’t actually understand my business, or the coverage is not what I think it is. If I do need to file a claim in the future, I don’t know if the insurance company would say "uh sorry, there was a mistake and we can’t cover this claim." Neither broker nor companies provided me with detailed plan documents, just 2-3 page quotes.... not sure if this is a red flag or common practice.

Also, I called Hiscox directly to ask about this, and to my surprise the rep claimed that they don't even cover software creators (only software resellers)...?! I'm hoping this is wrong since I think the second broker actually deals with SaaS's, so I'm calling them again tomorrow.

Any advice on how to get a sound business insurance policy is very much appreciated.

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mtmail 5y ago ↗

I've been in the same situation a couple of months ago used the Hiscox online quote tool. You can go through all steps and they let you download all fineprint documents on the second last page.

The base coverage document is for all companies you can imagine. There's lines about recycling toxic waste, which employees of your company fire brigade are covered, requirements for boat licenses when renting, subsidaries. Still good to have a read through. As with all insurances it's page upon pages what isn't covered.

Then Hiscox has multiple modules on top. Cyber insurance of two levels (if your data is taken ransom or a virus causes major destruction). Net IT which sounds like it covers computer and server outages but then the fineprint says anything outside your company (e.g. DNS down, hosting company down) isn't covered.

It's possible the second broker clicked every option in the tool and has a higher commission. By default US&Canada legal costs are excluded, maybe the second broker added a module specifically to covert those, too.

Key taks away for me was that many mistakes are covered. Once you promise something to a customer/client, be it a feature, deadline or SLA and you can't keep that promise then that's not covered.