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What Types of Insurance Does a Computer Repair Shop Need?

What Types of Insurance Does a Computer Repair Shop Need?

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What Types of Insurance Does a Computer Repair Shop Need?

Computer Repair Shop Insurance Quotes

Costs for business insurance can vary greatly, and getting insurance quotes from multiple companies is recommended in order to get the best pricing.

Coverwallet and Hiscox offer easy business insurance quotes at affordable prices.

What Types of Insurance Does a Computer Repair Shop Need?

When a client’s computer breaks or gets a virus, the client often depends on a computer repair business for help. Computer problems are frustrating and confusing to many, so repair shops are essential, providing much-needed support to their clients.

Computer repair businesses hold a lot of responsibility while working with a client’s computer. Lost information, erased files, and dead computers cause turmoil for the client and can cause problems for the repair business—especially if the error is the business’s fault.

Related: Guide to starting a computer repair shop

What Are Some Risks for a Computer Repair Business?

No business is without its risk exposures. Even on small scales, loss and liability risks can strain a business. For instance, some of the risks that a computer repair business may be exposed to include the following:

  • Introducing an error or mistake
  • Breach of cyber security
  • Fire damage
  • Customer injury

Introducing an Error or Mistake

A computer repair business is responsible for protecting a client’s computer and data. Therefore, introducing an error can have huge repercussions. For instance, a customer can suffer data loss, security vulnerabilities, and permanent damage if the repair business introduces an error or exposes the device to viruses or malware.

Another category of errors involves giving poor advice or incorrectly setting up a client’s computer system or network. The client pays for dependable service, and miscalculations by the repair business can result in failed services, expensive repairs, lawsuits, and a poor reputation.

Breach of Cyber Security

At times, the computer repair business may be required to store a client’s data either on a separate network or in the cloud. Complications arise when the repair company fails to protect the client’s sensitive data, and the data is then stolen or destroyed. Unfortunately, a security breach can result in identity theft, file damage, and financial data theft.

Cyber security also affects the computer repair business. Security breaches in the computer repair business can result in business interruptions, large-scale viruses, fraud, and a loss of the company’s private data. Unfortunately, viruses and hackers alike can cause substantial harm, often resulting in lost money, data, and, sometimes more significantly, reputation.

Fire Damage

Computer repair businesses have a large fire load, meaning that a fire can spread quickly and damage property. In addition, computers and their related equipment use cords that often require a significant amount of electricity. A building ill-equipped to handle the electricity demand is at risk of fire.

Building fires can also start from malfunctioning equipment (such as sparking computer parts) and smoking. Computer components that generate heat are another fire source as they can ignite nearby flammable materials. In addition, poor cleaning and clutter can increase the risk of fire and the fire’s level of severity.

Customer Injury

Another risk for computer repair shops will be customer injuries. Computer repair businesses regularly have clients and vendors come on-site; these patrons may sue the business if they are injured on the property. For example, slips and trips are common customer injury claims. Trip hazards increase with cluttered walkways and unsecured cords.

What Types of Insurance Should a Computer Repair Business Consider?

Insurance covers unplanned incidents and accidents that cause financial hardships for a business. Each policy covers a different risk aspect, so sometimes, the business needs more than one policy. Typically, insurance companies will bundle policies and lines of insurance coverage into one neat package as a Business Owner’s Policy (BOP) . Some of the policies that a computer repair business should consider include:

  • Professional Liability 
  • Cyber Liability
  • Property Insurance
  • General Liability
  • Workers’ Compensation

Professional Liability Insurance

Professional liability insurance (also referred to as Errors & Omissions Insurance or E&O Insurance) covers the computer repair business for negligence lawsuits resulting from hazards, such as:

  • Mistakes
  • Omissions
  • Unfulfilled services

For example, if the repair business fails to complete a service or introduces a damaging error, the client may sue. However, professional liability insures the business for these lawsuit exposures, saving the business from spending money on expensive legal proceedings. A professional liability policy covers claim expenses, such as legal defense costs and settlements. 

As a note, professional liability and cyber liability coverage have overlapping coverage, so it is preferable to insure both with the same insurance company for the same coverage amounts to avoid claim coverage disputes.

Cyber Liability Insurance

Cyber liability covers the costs associated with security breaches of computer files, data, and software. For example, while working on a client’s computer, an employee may accidentally or negligently expose a client’s sensitive information. Stolen, damaged, or hacked data can be costly for both the client and the business. However, cyber liability insurance covers resulting claim expenses, such as settlements, file recovery, computer repairs, and customer notification.

Insurance companies often offer two types of cyber liability coverage: 

  • First-party cyber liability, which covers claims for security breaches of the computer repair business
  • Third-party cyber liability, which covers claims for client data breaches

Each is important coverage since first-party and third-party liability are risks for a computer repair business.

Commercial Property Insurance

A property insurance policy is a core policy of many business-owner insurance packages. This line of insurance covers business-owned structures and business-owned property for physical damage claims. Property insurance policies cover perils, including:

  • Fire
  • Wind
  • Hail
  • Vandalism
  • Theft
  • Water from leaking pipes

Structures are covered at their rebuilding cost, up to an agreed policy limit. Sometimes, the insurance company inspects the structure to evaluate the coverage amount needed. Additionally, property insurance covers business property up to an agreed coverage limit. However, the policy’s terms stipulate how the insurance company will pay for property damage. Generally, the policy covers business-owned property on a replacement cost basis or an actual cash value basis (which covers items at their replacement cost, minus depreciation).

General Liability Insurance

Commercial general liability insurance is another key policy in a business owner’s insurance package. It covers bodily injury and property damage claims that occur on business property or because of negligence. For example, a general liability policy for premises and operations covers injury claims when a customer or vendor falls and injures themselves on-site. General liability offers coverage for:

  • Legal defense costs
  • Settlements
  • Third-party medical bills
  • Third-party property damage repairs

A computer repair business with on-site patrons should consider a general liability policy. Injuries can result in expensive lawsuits that a liability policy is designed to cover. Additionally, a general liability policy protects the business from offsite claims, such as an injury or damage claim during offsite repair work.

Workers’ Compensation Insurance

If you have employees or subcontractors, purchasing a worker’s compensation policy is extremely important. In fact, most states require that you maintain a current and active policy after hiring the first employee.

worker’s compensation policy will cover you and your employees in the event of:

  • Medical expenses due to injuries sustained while working
  • Loss of wages
  • Disability caused by work accidents

How Much Does Computer Repair Business Insurance Cost?

Insurance costs vary depending on the business’s needs. For example, a computer repair business that works on complex networks and has multiple employees needs higher coverage limits than a small-scale, owner-operated repair business.

Since each business has varying risk exposures and coverage requirements, insurance companies will consider various factors to determine coverage and pricing. Some factors that an insurance company will consider include:
– The size and condition of business-owned structures and property
– Data and computer security measures
– Employee certification or training
– The average number of customers and vendors who come on-site
– Any current or recent lawsuits or insurance claims

A computer repair business can best determine insurance costs by contacting multiple companies for a quote. Many insurance companies offer bundling discounts, which reduce the price as well as the administrative work required for policy renewals.

What Types of Insurance Does a Computer Repair Shop Need?

What Types of Insurance Does a Computer Repair Shop Need?

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