How much does software as a service (SaaS) business insurance cost?

SaaS companies pay an average of $91 per month, or $1,094 annually, for tech E&O insurance. This policy bundles errors and omissions insurance with cyber insurance at a lower cost than buying the policies separately.

Errors and omissions insurance, also known as professional liability insurance, provides financial protection against claims of professional negligence. For example, if there’s downtime when a client needs your services, the result could be a lawsuit.

Tech E&O adds third-party cyber insurance to this coverage, which extends protection in case your mistake or oversight leads to a data breach or cyberattack on a client's business.

This is the average E&O insurance for SaaS professionals who buy from Insureon:

Insurance premium: $91 per month
Policy limits: $1 million per occurrence; $1 million aggregate
Deductible: $2,500

The cost of errors and omissions insurance depends on factors such as the coverage limits you choose, the size of your business, and the SaaS products or services you offer.

IT companies and contractors pay an average of $153 per month, or $1,837 per year, for cyber insurance. This policy is vital for businesses that store customer data, such as credit card numbers, Social Security numbers, and email addresses.

Cyber insurance covers the cost of complying with your state's data breach laws after a cyber incident. It can pay for legal fees, customer notification costs, and data recovery efforts related to a data breach or cyberattack. You may also see this policy referred to as cyber liability insurance or cybersecurity insurance.

The cost of cyber insurance depends on your cyber risks and the amount of personal information handled by your software company.

The average cost of a fidelity bond is $88 per month for SaaS businesses, or $1,054 annually. Some clients, especially in the financial services industry, may require a bond before they will use your services.

Fidelity bonds reimburse your client if one of your employees commits fraud, theft, or forgery, including illegal electronic funds transfer. This amount must be paid back to the company that issued the bond.

The cost of a fidelity bond is typically a small percentage of the bond amount.

SaaS companies pay an average of $31 per month, or $371 per year, for general liability insurance.

A general liability policy helps pay for legal costs from accidents that harm clients or damage their property, along with advertising injuries. For example, it would cover costs if a client trips on an uneven step at your office and sues over the resulting injury.

This is the average general liability coverage for SaaS businesses that buy from Insureon:

Premium: $31 per month
Policy limits: $1 million per occurrence; $2 million aggregate
Deductible: $500

Insureon’s licensed agents typically recommend a business owner’s policy (BOP), which combines general liability insurance with commercial property insurance at a discount to protect your computers, servers, and other business property.

For SaaS companies, the average premium for a business owner's policy is $47 per month or $569 per year. You can also add business interruption insurance to protect against financial losses from a forced closure due to a fire or storm.

The cost of general liability insurance depends on factors such as the coverage limits you choose, the size of your business, the amount of foot traffic, and any subcontractors or additional insured endorsements. Learn more about how your premium is calculated.

SaaS companies and startups pay an average of $40 per month, or $485 annually, for workers' compensation insurance.

This policy covers medical expenses and disability benefits when you or an employee suffers a work-related bodily injury or illness. For example, a manager could trip and hit their head during a meeting, or a developer might get carpal tunnel syndrome after years of working at a keyboard.

SaaS companies that have employees typically must purchase workers' comp to comply with state requirements and avoid penalties. It's also recommended for sole proprietors, as health insurance plans can deny claims for injuries related to your job.

Most policies include employer's liability insurance, which covers the cost of lawsuits related to workplace injuries.

The cost of workers' comp depends on the number of employees and their occupational risks, among other factors.

Tech companies and contractors pay an average of $198 per month, or $2,375 per year, for commercial auto insurance. This policy can pay for property damage and medical bills in an accident involving a vehicle owned by your SaaS business. It can also cover vehicle theft, vandalism, and weather damage.

Most states require this type of insurance for vehicles owned by a business. For personal, rented, and leased vehicles used for work purposes, look to hired and non-owned auto insurance (HNOA) instead.

The cost of commercial car insurance depends on several factors, including the policy limits you choose, coverage options, the value of your vehicle, and the driving records of anyone permitted to drive.