Insurance for B2C services companies

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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.

This is where a Cyber liability comes in to protect your company and mitigate the cyber risks that are simply out of control.  In addition to dealing with the costs of any court cases, a good Cyber policy can even cover your lost business from the time affected by the data breach.

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!

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