If you run an IT or technology services business, you're probably focused on the latest security threats, client projects, and keeping your systems running smoothly. But here's what catches most tech business owners off guard: a single client lawsuit over a missed deadline or a data breach can cost more than your entire year's revenue. That laptop you spilled coffee on at a client's office? That's a claim. The ransomware attack that locked up your client's data? That's a much bigger claim.
The good news is that insurance for IT companies isn't as complicated or expensive as you might think. Tech and IT businesses typically pay between $24 and $38 monthly for basic coverage, though your actual costs depend on your location, services offered, and claims history. The key is understanding which coverages you actually need and which ones are just nice to have.
General Liability: Your Foundation Coverage
General liability insurance is where every IT business should start. Think of it as your basic protection against everyday accidents that have nothing to do with your technical expertise. If a client trips over your laptop bag in their office and breaks their wrist, general liability covers their medical bills and your legal defense if they sue. If you accidentally knock over their expensive monitor while setting up equipment, it covers the replacement cost.
For IT consultants and small firms, general liability runs about $29 per month on average. That's less than most of us spend on streaming services, and it's often required before you can even sign a client contract or lease office space. Many clients simply won't work with you without proof of general liability insurance—it's that fundamental. In most cases, this is the first policy new IT business owners purchase, and for good reason.
Professional Liability: Protecting Your Technical Work
Here's where things get more specific to your IT work. Professional liability insurance—also called errors and omissions or E&O insurance—covers claims related to your actual services. Did your software implementation miss a critical deadline, costing your client lost revenue? Did a bug in your code cause their system to crash during a busy sales period? Did your network configuration fail to prevent a security breach? Professional liability steps in to cover your legal defense and any settlements or judgments.
IT businesses pay an average of $67 per month for tech E&O coverage, though this varies based on your risk profile. Common scenarios include software glitches causing data loss, equipment failures preventing online operations, failed cloud backup services, and missed project deadlines. Many contracts require professional liability coverage with limits of at least $2 million per occurrence before they'll hire you. It's also worth noting that this is a claims-made policy, which means it must be active when the claim is filed, not just when the mistake occurred.
Cyber Liability: The Growing Necessity
If you think cyber insurance is optional for IT companies, consider this: 60% of small businesses that experience a cyberattack collapse within six months. The average cost of a data breach is $4.44 million, and over $10 million in the U.S. specifically. For IT companies that handle client data, network infrastructure, or provide security services, cyber liability insurance has moved from "nice to have" to "absolutely essential."
IT businesses pay an average of $148 per month for cyber insurance—significantly higher than other industries because the potential for financial losses and reputational damage is greater. But that cost is nothing compared to the alternative. Cyber insurance covers client notification costs after a breach, legal fees, regulatory fines, business interruption costs, and ransomware payments. The cyber insurance market has grown to $14 billion and is expected to reach $29 billion by 2027, reflecting how critical this coverage has become.
The good news for 2025 and 2026? Premium increases are stabilizing after jumping 50% in 2023. Even better, companies with strong security controls—multi-factor authentication, endpoint detection, and security information and event management systems—are seeing lower rates. Insurers are rewarding businesses that take security seriously, which means your investment in security tools can actually reduce your insurance costs.
Business Owner's Policy: The Cost-Effective Bundle
For small IT operations, a Business Owner's Policy (BOP) often provides the best value. A BOP bundles general liability and commercial property insurance together, typically at a lower cost than purchasing them separately. If you have office equipment, computers, servers, or other physical assets, the property coverage protects against fire, theft, and damage. The general liability component covers the bodily injury and property damage scenarios we discussed earlier.
Small IT businesses can often get a BOP for $30 to $50 per month, depending on their location and assets. It's a straightforward way to cover multiple exposures without juggling separate policies. However, remember that a BOP doesn't include professional liability or cyber coverage—you'll need to add those separately based on your specific risks.
What About Workers' Compensation?
If you have employees, workers' compensation insurance is required in most states. It covers medical expenses and lost wages if an employee gets injured on the job. Even for IT businesses where most work happens at a desk, accidents can happen—repetitive stress injuries, slip and falls in the office, or injuries during equipment installation at client sites. Workers' comp protects both your employees and your business from the financial fallout of workplace injuries.
How to Get Started with IT Services Insurance
Start by evaluating your actual risks. Are you a solo consultant working from home? You might need just general liability and professional liability to start. Running a managed services provider with multiple employees and client data access? Add cyber liability and workers' compensation to your list. Have office space and expensive equipment? Consider a BOP.
Review your client contracts and lease agreements to understand what coverage they require. Many contracts specify minimum coverage limits—typically $1 million to $2 million per occurrence for general and professional liability. Don't wait until you're about to sign a major contract to realize you need insurance; the application and underwriting process can take time.
Get quotes from multiple insurers that specialize in technology businesses. They understand your unique risks better than general business insurers. Be honest about your operations, security practices, and client types—accurate information ensures you get the right coverage and aren't surprised by claim denials later. And remember, insurance is an ongoing expense, but it's far cheaper than the alternative of facing a lawsuit or data breach without protection. Your IT business is valuable—make sure it's protected.
