@madshadow hey I know you wanted me to keep you posted on my decision 
After talking with a couple of other business people that I trust, I decided to basicaly do what @patio11 said in his initial post, which is to hold off until I hit somewhere around $100k or thereabouts.
Alrighty, little bit of an update.
Thankfully, sales have increased and itās time to work through this issue more carefully.
Iāve talked to a number of people about this and generally Iāve found that most people donāt really have any concept of what theyāre covered for or not covered for. They have a general sense of peace of mind because theyāre paying something.
But they also know that they donāt really know what theyāre covered for and suspect that if something went down, thereās a good chance the insurance company would try to get out of covering it.
So, little bit of a weird sense of security - but Iāve heard the same thing over and over.
Iāve seen strong endorsements of FounderShield from both Rob Walling and Josh Pigford. Talked to them - the founder is super nice and quite responsive by email and phone. But they havenāt really given me much in the way of detail beyond spitting out a standardized insurance quote.
Also emailed Patrick to get that insurance broker referral but didnāt hear back yet. I know Patrick is a busy man though and donāt expect him to respond to my every email. Iāll ping him again now 
Iām still trying to wrap my head around what coverages I should go for and how much coverage I need. Here are a few specific questions that Iād love to get answered. I have a feeling no one will have this information, including the foundershield founder - but weāll see:
- What are the top 3 to 5 factors about my business that are driving cost of insurance?
- What are the top 3 to 5 types of losses that companies like mine file claims for?
- What is the percentage of companies like mine that file for a loss over the past 10 years?
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This whole process of buying insurance is so weird. To use an analogy that all of us would understand, itās kind of like a non-technical business guy who needs a website.
He asks around, everyone tells him to use Wordpress, and get a $1k site. Thatās the prevailing wisdom. Kinda like getting a $1m coverage is the prevailing wisdom for whether to get business insurance.
He says - will anything go wrong? They say āoh yeah, if something goes wrong thereās a good chance that youāll get screwed, but hey, what are you gonna do. Itās better than nothingā.
But the information that he actually needs is:
- Your highest risk security wise are plugins that are not updated. You should probably be on managed wordpress hosting that manages plugin updates and only accepts well regarded plugins
- Your highest risk in terms of the development is hiring someone who doesnāt have expetise in the type of thing you want to build. So you want to hire a company that has a lot of experience building wordpress solutions, and you probably want to pay them in the range of $5k to $25k.
But no one tells him any of this. When he asks what the biggest risk factors are, they have no clue. They just tell him to spend the $1k and pray nothing goes wrong.
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Obviously, insurance by nature is kind of complicated. No one can give me an exact answer of exactly how covered I am for every potential scenario that could unfold. But it just seems to me that people donāt even have a broad strokes understanding of what is covered with business insurance.
And it probably has a lot to do with the fact that most of us just donāt know people in our networks that have actually dealt with business insurance claims.
When you think about car insurance - we know that there can always be hairy scenarios in which we might get screwed. But by and large you know what youāre getting into. You kind of know the chances that youāre going to need to file a claim - you know several people (probably yourself included) that have done so in the past.
So you can make a relatively informed decision over whether you need comprehensive coverage or not.
But when it comes to business insurance, none of us really know anyone thatās ever had to use it. So we go ahead and pay for something based on an algorithm that also knows very little about our type of business (i.e. in the event of a Stripe breach, will we be responsible for the tokenized cards or will they be? Might not be what you think).
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Also, here are a few resources Iāve found:
- Insurance Sub Reddit - pretty interesting. Mix of insider baseball between insurance agents and insurance consumers asking them for questions / feedback.
- FounderShield - insurance focused for SaaS founders (in theory at least).
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Feedback welcome, so long as itās specific. If youāre going to say something to the effect of āpaying $X to protect your business is worthwhileā without any specifics, that wonāt be super helpful.
[quote=ākalenjordan, post:22, topic:2159ā]
Obviously, insurance by nature is kind of complicated. No one can give me an exact answer of exactly how covered I am for every potential scenario that could unfold.
[/quote]Yep. I worked at a medical malpractice insurance company for a couple years. Insurance, like the law, can be infuriating to those with logical minds (like me, and I assume you) who want straightforward rules they can follow to be perfectly protected. Sadly neither system works that way.
Do you already have an existing business relationship with a lawyer, and have user, support, etc. agreements created with a lawyer? You may be able to head off a lot of trouble that way.
Insuring software companies and especially those active in the online world is a pretty new field. I think thatās why many people donāt really know the limits of their insurance contracts. Iām in the same boat. Iām pretty sure Iām covered in the important cases, but I wonāt know until you actually need it, which I hopefully never will.
The most important thing for me is that Iād get legal help if I need it. I have a feeling that may be the most expensive part if anything ever happens. But again, unproven.
The questions I had to answer when I applied for insurance are partially the answer to your questions above:
- Do you store personal data for clients? How much and where? Do you have a backup strategy for that?
- Do you have terms&conditions and have they been verified by a lawyer?
- Are there clauses in your contracts that limit your liability? Have they been verified by a lawyer?
My company and me are in Belgium and the rate for this kind of business insurance was so low it was a no-brainer and I just took it.
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Thanks Peter. I donāt think I was asked questions #2 or #3 in the form that I filled out to get a quite. Interesting. Makes sense that those would be important indicators.
I think part of what makes business insurance a lot more mysterious than other forms of insurance that we deal with is that most of us just have a very small sample size in terms of having first hand or second hand contacts that have actually dealt with claims.
When you say Iām pretty sure Iām covered in the important cases, what are those cases?
Can you share what kind of cost your insurance policy is? (Iāll DM you to see if you might prefer to share any of this privately if at all).
Iām in the same boat as Andy way up in this thread. Itās about 600 euros each year (for my limited liability business with only me working in it)
The insurance is called āberoepsaansprakelijkheidā in Dutch. Literally translated thatās āprofessional liabilityā. Iām not sure if thatās the name used in English, but it could be
Itās a very broad policy. It should protect me against any of my mistakes that I make in a professional context and that I did not make intentionally. There are some limits to that. I donāt have the exact terms here with me, but I believe it covers about 1.5 million in material damage and a lot less (500k?) immaterial damage. And it includes legal help if you need it.
There are a few additional policies you can take to increase that last number in special cases (like accidentally breaking intellectual property laws or introducing viruses on your client computers)
Wanted to mention that http://www.hiscox.com/ is pretty awesome. I think theyāre more of a direct brokerage or something - so I think youāre saving some money on the cut that the agent would normally take. Their prices seem to be a lot cheaper than some other options.
They offer retroactive coverage which was something that some of the other policies I looked at didnāt cover.
Also they donāt require a general liability policy in order to get an E&O policy. Other agents that I had talked to said that this was a requirement, which seemed odd.