Robotics is the inspiring intersection of engineering and computer science. This industry has all but taken flight in the 20th century, contributing to our everyday lives, commercial goals, and military missions. It’s a fast-growing and ever-evolving space that continues to reach new benchmarks each year.
Robots are often assigned to do jobs deemed too hazardous for humans, such as deep-sea exploration, bomb defusing, rescue missions, etc. But consider the use of drones and self-operating vacuums, as well. Plenty of individuals depend on robots in their homes or for leisure. Plus, many other industries lean on robotics for education and training purposes. Although robotics has carved out a distinct space in which to contribute to the world, it faces a unique set of risks, too
Why is Insurance for Robotics Organizations Important?
Although robotics companies experience challenges that other companies don’t, they still face the same fundamental risks of doing business. Insurance is a crucial safety net for robotics companies to have to keep operations from halting or the company from shuttering.
As mentioned, some robotics companies have faced multiple challenges in gaining momentum. For example, to move forward on a pilot project, a company needs plenty of safety nets, including insurance. Without the right policies, most local governments won’t greenlight the project.
Robotics is an industry ripe with innovation. The engineers, developers, technicians, and operators thrive on new technologies and fresh ideas. In short, it’s a space filled with rapid development. A lawsuit or legal holdup can whiplash a robotics company quickly, impacting everyone involved — sometimes shuttering the most well-intended business. To support continued evolution, robotics companies need insurance to help keep up the swift pace.
Robotics companies tend to invest in high-end equipment that is often specially designed for the company’s overall vision. Nearly $1.5B worth of robots and equipment was shipped to North America in 2018 alone. If your company suffers from a natural disaster or break-in, it might be challenging to repair or replace the equipment and space designated for business operations.
Many industrial robots are operated or monitored remotely, putting your data at risk. A cybercriminal could steal information, such as production data, or even target a specific robot. In either case, data breaches — which cost companies over $4M on average — could cause damage to your entire operation’s workflow as well as the equipment itself.
If someone sustained a personal injury because of a robot, it’s tricky to determine whose fault it is. Do you blame the technology or the human being that is manning the robot? Thankfully, the insurance industry has not seen a massive uptick in liability claims from the robotics industry. However, the few cases that have surfaced shed light on this particular vulnerability. Some insurance carriers aren’t confident how to insure robotics companies because so little history exists on incidents within the industry. Liability is undoubtedly a significant exposure to face in the world of robotics.
If a robot fails to perform as expected or intended, the failure could result in financial loss. The root of the problem could be an ill-fitting part or a slew of other issues. As in many markets, the robotics industry depends on trial and error to move forward in innovation — but product failures can cost well over $1.5M. Still, someone must take responsibility when things don’t work as planned.
Recommended policies for Robotics companies
These coverages form the foundation of any risk management program for Robotics companies:
General liability offers broad protection against some of the most fundamental risks companies face. Known as “slip-and-fall” or “all-risk” insurance, this policy covers personal or property damage and bodily injury occurring on the business premises.
When employees sustain work-related injuries, employers are typically responsible for their medical costs and lost wages. This policy covers these expenses, protecting employees while simultaneously keeping robotics companies running smoothly.
Cyber insurance protects companies from third-party lawsuits relating to electric activities (i.e., phishing scams). Plus, it offers many recovery benefits, supporting data restoration and reimbursement for income lost and payroll spent.
Employment Practices Liability
Any company with employees faces the risks of allegations, such as discrimination, wrongful termination, breach of contract, etc. This coverage protects companies against lawsuits related to employment practice
Robotics Specific Coverage
These policies are essential for or can be tailored to the needs of companies operating in the Robotics space:
Companies offering tangible products or services risk third-party lawsuits claiming bodily injury or property damage. Consider McDonald’s notorious “Hot Coffee” case in the 1990s, for example. No matter if the claims are grounded or not, this policy covers defense fees and settlements
Whether it’s a devastating fire, natural disaster, or burglary, property insurance responds. This policy reimburses companies for direct property losses, supporting recovery and momentum.
Transit & Transportation Insurance
Logistic companies move goods by the ocean, air, and land, facing the risk of damaged goods, theft, and other liabilities. This policy protects from business property loss or damage when it’s in transit or stored offsite.
Types of Ecommerce Companies that need insurance
- Machine Learning
- Marine tech
Robotics Frequently Asked Questions
The cost of insurance for robotics companies will depend on several things, including the company’s size and development stage. Other factors include:
- Exposures: risks being insured.
- Company practices: views on safety, compliance, and risk management.
- Program structure: the amount of deductible and willingness for a company to assume more risk
- Claims history: the type and amount of past claims against the company