Just released: How to raise venture capital in 2023

Download

Insurance for B2C services companies

Carl Niedbala - Founder Shield
Carl Niedbala

COO & Co-Founder

The Space

There’s a new breed of technology-enabled B2C services startups and we deal with a ton of them at Founder Shield.  Think Uber, GetMaid, Makespace…all of these companies use custom platforms to access traditional service providers in very non-traditional ways.  This creates exposure to a wide variety of liability.  Here’s a quick look:

Risks

1. Physical damage

Performing consumer services always opens your company up to liability for physical damage, including bodily injury and property damage.  For example, what happens when one of your subcontractor/employee maids for your on-demand maid service damages a client’s home?  How about when that same maid (rough day at work!) leaves a wet kitchen floor and your client breaks their leg when they slip and fall after work?  Hint: you’re probably getting sued.

Unfortunately, it’s impossible to monitor the activities of all of your employees at all times.  You can (and should) put controls in place, such as employee handbooks and customer sign-off procedures, but accidents happen.  Some things are just out of your control.  A General Liability policy will cover any physical damages and fill the gaps where your even your best efforts can’t reach.

2. Service Failures

“Product Failures” can come in a couple flavors for this era of B2C service startups: tech product failures and actual service failures.

A tech product failure occurs when your consumers can’t use your provided services due to a bug or glitch with your tech product.  So to use the maid example again, glitch in your app accepts payment from customers, but for some reason fails to load these new customers into the system.  You never clean their apartments, and now they’re pissed AND they don’t have their money back yet.  With one simple glitch like this, you could face a class action lawsuit.

The other type of failure is failure of the service itself.  This happens when you fail to meet all the terms of your customer contracts or terms of service on your website.  For example, maybe you didn’t deliver the promised level of quality from the customer’s point of view.  Or maybe you failed to abide by your own return policy when a dissatisfied customer complained.  Its important to realize that these terms don’t even have to be explicit…certain warranties are implied in customer contracts!

You can do plenty of things to mitigate these service failure risks and reduce damages, but that fact is that people still may sue you and you’re going to have to defend yourself.  A good Errors and Omissions policy will help cover these costs, including settlements or damages if you lose.

3.  Security Breaches

This breed of B2C services companies leverages technology in the form of websites and apps that allow their customers to access services with the tap of a finger.  These companies usually make this happen by storing customer information, including names, addresses, phone numbers, and payment options.

If a data breach occurs on your networks or servers, you’re responsible for what happens to your customers’ information!  Its important to keep in mind that most of these breaches are not due to malicious hackers or viruses; they occur from simple accidents.

In today’s digital world, cyber threats are constantly evolving, leaving businesses vulnerable. While a cyber liability policy can’t eliminate every risk, it offers crucial protection by mitigating the financial impact of data breaches and cyberattacks. Explore the different ways to control risk and ensure your business has a comprehensive cyber insurance plan in place to safeguard your operations and reputation.

How to protect yourself

This is just a basic overview of some of the bigger risks that modern B2C startups face today.  If you want to learn more about getting your company covered, feel free to reach out to us or get a quote any time!

Related Articles

cyber insurance pricing trends 2024
March 13 • Cyber Liability

Cyber Insurance Pricing Trends 2024

Uncertain about cyber insurance costs in 2024? Our article explores pricing trends, expert predictions on rate increases, and strategies to potentially reduce your cyber insurance premium.

cyber liability insurance premiums
March 4 • Cyber Liability

7 “Must Haves” For Cyber Liability Insurance in 2024

With cyber liability insurance premiums rising, business leaders must have the inside scoop to keep costs low. Our partners at Blacksmith InfoSec delve into those tips and tricks.

Cybersecurity Data Breaches
November 9 • Cyber Liability

Top 10 Cybersecurity Data Breaches of 2023

Today’s digital landscape is frightening for business leaders. Here’s a glimpse into some of the most cringe-worthy data breaches in 2023 — plus, how to avoid them.

Cyber Insurance Pricing Trends
July 19 • Cyber Liability

Cyber Insurance Pricing Trends 2023

After a hard-hit 2022, let’s explore the lessons learned, what currently impacts the cyber market, and cyber insurance pricing trends to expect in the future.

multi factor authentication
January 24 • Cyber Liability

Securing Your Company With Multi-Factor Authentication: A Complete Guide

Cybersecurity is a priority for most company leaders, with multi-factor authentication spearheading the endeavor. Here’s how to make it a reality in your organization.

cybersecurity-awareness-month
October 6 • Cyber LiabilityRisk Management

Cybersecurity Awareness Month 2022 — Data, Data, Goose!

As the leaves turn golden and the wind blows colder, cybersecurity awareness month is upon us! Here’s what it’s all about and how your company can stay cyber-safe.