How a Web Hosting company can suffer massive loss without Business Insurances

February 10, 2021 Web Hosting 4 minutes read

When you run a successful web hosting company or any other business, There are always chances that something could go wrong. Your data center may get hit by a storm, which leads to a power outage, your servers may get attacked by hackers, your clients’ data gets stolen, or a dissatisfied customer puts a lawsuit against you. There are many risks like a natural disaster, cyberattack, theft, property damage, etc.

Dealing with these issues can be devastating for web hosting companies. Purchasing a set of insurance policies is crucial for a web hosting company to deal with significant problems, including massive lawsuits. Insurance policies can save a company from going down due to financial losses or deteriorating its brand image.

Types of insurance policies for web hosting providers

There are many types of insurance policies. Each of them deals with a separate set of issues like paying for property damages because of natural disasters, settlements in a lawsuit because of technical negligence or a cyber attack, or employees’ medical expenses if they get hurt while working. 

Cyber Liability Insurance

Your company might have professional cybersecurity protocols implemented, and it might be immune to lots of cyberattacks. Still, cybercriminals are always getting stronger and smarter in finding loopholes and damaging your company. Once they find an exploit, they can easily steal your customer’s data or delete them. Even if you have placed strict protocols and regularly update them as needed, there’s always a chance of human error.

Cyber liability insurance policies can help you with that. Of course, this insurance can not prevent these attacks, but it can save you from the aftermath. One of your customers’ confidential data, like name, email, contact numbers, credit card numbers, was stolen by cybercriminals. The customer files a complaint against you for not keeping their data safe. The judgment is to pay for their losses. Your insurer will pay the legal fees and any settlements.

Errors and Omissions Insurance (E&O)

Also known as Professional Liability Insurance, This insurance helps you if there were some losses because of an error. You might be an expert in your field, but there’s always some mistake that everyone oversees until it comes and hits hard. Errors and omissions insurance policies protect you from these damages. Damages that occur because of website downtime, data loss, professional negligence, etc., can be insured with this policy.

It covers the following costs:

  • Legal defense costs
  • Court costs
  • Court-ordered judgments
  • Settlements
  • Legal fees

Commercial Property Insurance

Any web hosting company depends on its high infrastructure data center with servers built with cutting edge pieces of equipment. These are expensive equipment. They have to run continuously without any interruptions. In case an unexpected disaster hits your data center, the damages can be challenging to repair or replace. Chances are, your company may not be able to bear the cost of a replacement. Here is where commercial property insurance policies come into use.

General Liability Insurance

General liability insurance policies are a must for all businesses. These policies protect you if your company has caused bodily damage, personal injury, or property damage to a third party. It also covers personal and advertising injuries such as copyright infringement. Let’s say you used a logo that looks similar to another companies logo that company can file a complaint against you for copyright infringement.

You can purchase the previous two insurances as a bundle called Business Owner’s Policy (BOP). 

This policy is helpful in scenarios like:

  • Business property like servers damages.
  • Client equipment damages.
  • Natural disaster damages.
  • Client injury at your place.
  • Third-party injuries or damages.


Purchasing a proper set of insurance policies can save your business from a hard hit of an unexpected storm. It will help if you buy a set of insurance from the right insurer. 

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