Coverage Definitions

Commonly referred to as “Business Insurance”, Commercial General Liability (CGL) is the most widely purchased insurance coverage. CGL is typically recommended to all businesses as it’s designed to protect you and your business from some of the fundamental risks that come from running and owning a business. Coverage includes physical damage to someone else’s property (buildings or contents) and personal injuries, where you or your employees may be responsible.

The legal costs alone to defend your business against lawsuits can be devastating, Commercial General Liability insurance is an affordable and necessary way to protect your hard work against these unforeseen risks.

• Do you lease a space? Your landlord or incubator will require proof of liability coverage. You also need protection against liability you hold as a tenant in your landlord’s or incubator’s space
• Is your business model Business to Business? Your clients may require proof of insurance in a contract in order to transact business with them
• Do you sell a product or service? You are legally liable should your product or service cause physical injury to a customer or their property
• Do you have sales people? You may be legally liable for their automobile liability while they are using their own vehicles to sell your product or service

Another type of liability insurance, Errors & Omissions (E&O) coverage can also be called “Professional Liability”. Similar to Commercial General Liability (CGL), E&O is necessary in protecting your business against lawsuits from negligence, mistakes, and breach of contract.

The difference between the two is that CGL covers physical damages, while E&O covers the financial loss you or your business may cause to another person or business.

• If you provide a service or software that helps process, report, market, teach, code, host, develop, manage, audit, control, advise….you need errors and omissions coverage.
• Mistakes may happen, causing your product, service or software to not function as intended, leading to financial loss for your clients, and they may seek financial retribution from you. Think of the potential loss your client may face if they are unable to use your software for an extended period of time due to an error.
• Customer satisfaction - a customer or client may feel as though you did not execute your service, product or software as required in a contract. E&O can be there to support you in rectifying the situation, including legal costs and other potential costs or financial losses.
• You may need E&O coverage to meet a contractual requirement just to do business with a client - they want to know there is protection for potential errors or omissions that may cost them money.

With data quickly becoming a more valuable asset than physical property, Cyber Liability Insurance can help you protect your data and any liability surrounding it.

If you or your employees hold any personal or company data, integrate it with another’s system, generate content, or use online communication of any kind, you need Cyber Liability Insurance. With the vast scale of data in play, you could be at risk of significant costs in notifying customers and other relevant parties of a data breach and potential legal action taken by those affected by a data breach caused by negligence.

• You’re building trust among your customers, you want to protect your reputation after any potential breach caused by your software or employees
• Your employees may unknowingly or unintentionally let a third party access your data, whether through a ‘back-door’, losing a computer or external data storage device or falling for a phishing scam. This could lead to an infringement of personal information regulations and/or lawsuit for damages and negligence in protecting private information.
• To protect against a denial-of-service attack that might prevent customers from being able to use your service or product, potentially leading to costly downtime for you and your clients.
• Even though you may take all the precautions you could possibly take, cyber risk still exists. The sophistication of hackers is ever-evolving, the level of regulation varies from country to country with varying degrees of legal liability and mistakes still happen.
• Large enterprise businesses are beginning to require their third party suppliers and service providers to obtain cyber insurance, due to the increase in incidents of hackers accessing their systems through their suppliers.
• Privacy laws vary by country, province and state, with certain laws requiring notification of a breach of customer privacy. Notification costs add up quickly.

Directors and Officers (D&O) Insurance protects your company, its executives, officers and the personal liability associated with sitting on your Board of Directors. This type of insurance is necessary for all businesses, especially if you plan on obtaining Venture Capital funding.

Allegations of mismanagement can be devastating for any startup; D&O insurance provides protection for your fiduciary duty to protect your investors, directors and officers against claims made by regulators, employees, former employees or competitors to name a few.

• If you ever plan on obtaining VC funding, they are going to require proof of Directors & Officers coverage, in order to protect them should they become involved with your business.
• Fiduciary duty to your investors to properly manage the business and funds. In the event they feel this duty has been breached, the legal costs to defend your board or executives can be crippling.