Software as a service (or SaaS) is a way of delivering applications over the Internet—as a service. Instead of installing and maintaining software, you simply access it via the Internet, freeing yourself from complex software and hardware management.
SaaS applications are sometimes called Web-based software, on-demand software, or hosted software. Whatever the name, SaaS applications run on a SaaS provider’s servers. The provider manages access to the application, including security, availability, and performance. (stolen from Salesforce).
Biggest liability is how they store data. And more often than not, the data is personal, sensitive, or otherwise confidential. Stored data ranges from Personal Identification Information (“PII”), to credit card numbers, to medical records, and more in the 3 examples I just cited. Collecting, recording, or storing any of this information opens a company up to lawsuits based on data breaches, which you’ll know expensive and occur more often than you’d think.
This general characteristic of Enterprise/SaaS products makes a Cyber Liability policy totally worth it. A good cyber liability policy will cover the costs associated with lawsuits due to any type of data breach, whether it is caused by hackers, denial-of-service attacks, employee negligence, and much more. It can also cover the costs of business interruption incurred by the data breach and compensate for the loss or theft of intangible electronic property.
Customers rely heavily on their Enterprise or SaaS products. And Enterprise/SaaS companies want to foster that reliance because most of the money made in the space comes from recurring revenues generated by existing clients. The SaaS model in particular essentially runs on renewals.
When you have a tech business that encourages its customers to rely on its product, any product downtime is completely unacceptable. If your platform goes down, your customers lose money…and you get blamed for those losses! Furthermore, even if your product is working, but it’s not working up to certain customers’ standards, they might still sue you (for negligence, misrepresentation, or failure to perform, for example).
Errors and Omissions (“E&O”) insurance policy will cover you for losses related to product failures or malfunctions and customer-satisfaction-related lawsuits. E&O insurance will compensate you for the legal fees, settlements, damages, and any financial loss you suffer in dealing with the claims.
You can have the best product on the market, but that doesn’t stop over-demanding customers from bringing lawsuits. And even if you have all your “ducks in a row” and will likely win every case, someone still has to pay the legal fees. Errors and Omissions insurance can mitigate these costs and protect you if and when something goes very, very wrong.
Though Enterprise/SaaS companies have an abundance of applications across all industries, their risk exposure remains somewhat uniform. A quality suite of insurance products with strong Cyber Liability and Errors and Omissions policies can mitigate a lot of the risks these companies face.