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Industry Insights

Words of wisdom from our business insurance experts.

Digital Health & HealthTech Insurance: Costs, coverage, and Considerations

5 min read
May 2, 2024
Digital Health & HealthTech Insurance: Costs, coverage, and Considerations

Technological innovation has always been a part of the healthcare industry: consider the invention of the stethoscope in 1816 or the discovery of X-rays in 1895. Of course, technological progress has only sped up in recent years—and as you might expect, these advances have had a significant impact on the world of healthcare. 

Today, the use of technology in the healthcare industry is known as “healthtech.” In order to succeed in this field, healthtech companies must be prepared to protect themselves from patient injuries, regulatory compliance issues, data breaches, and many other risks. Here, you’ll find an in-depth overview of the dangers healthtech businesses regularly deal with—and the insurance policies that can help.

What is healthtech?

The term “healthtech” can describe any technological solution intended to be used in hospitals and other healthcare facilities, from specialized software and wearables to AI tools and robotics. Businesses in this space primarily aim to help healthcare providers improve in two key areas: 

  1. Efficiency. Healthtech solutions can reduce patient waiting times, improve hospital staffing, and shorten recovery times after surgeries.
  2. Quality of care. Since many healthtech companies focus on customization and personalization, the products and services they offer can give healthcare providers an opportunity to deliver better care than ever before.

What risks do healthtech companies have?

Of course, healthtech businesses aren’t immune to risk. With that in mind, people running these businesses must account for potential problems like:

Injuries to patients

No business wants to injure its clients, and that goes double for companies in the healthcare field. But even though human error is a common cause of healthcare-related injuries, the same is true for technological failures. In any case, patient injuries can cost healthtech businesses in terms of time and money.

Compliance with regulations

Businesses in the healthtech industry must comply with regulators on the federal, state, and local levels. These regulations can differ from one level to the next, making it extremely difficult for businesses to follow them—and increasing healthtech companies’ overall compliance risk.

Cybersecurity issues

The healthcare industry is an appealing target for cybercriminals; in 2023, the U.S. healthcare sector experienced 809 data compromises. Of course, the fact that healthtech businesses deal with both healthcare and technology makes them even more vulnerable to cybercrime (and accidental data breaches, for that matter).

System failure

The rapid pace of technological development has its downsides—including the fact that this progress is happening so quickly that regulators can find it hard to keep up. As a result, system failure is a prominent risk in the world of healthtech. If your systems go down temporarily, your company could easily be found responsible for the downtime—and take a hit to its bottom line and reputation.

What insurance do healthtech companies need?

Considering the risks described above, healthtech businesses should invest in policies such as:

General liability insurance

Few businesses can get away with not having general liability insurance, and that definitely includes companies in the healthcare sector. Even if your healthtech business focuses on providing products or services instead of running a clinic of its own, general liability insurance is still a must.

On a basic level, this form of insurance covers claims related to:

  • Injuries to patients and visitors (such as slips and falls)
  • Advertising injuries, including libel and slander
  • Property damage affecting patients and visitors

Workers’ compensation insurance

If you have a healthcare-related business with employees, there’s a good chance that your state requires you to have workers’ compensation insurance. This form of insurance protects the people working at your healthtech business from major accidents, injuries such as carpal tunnel syndrome, and everything in between.

When you have a workers’ compensation policy in place, you’ll get help paying for injured employees’:

  • Immediate medical costs (including ambulance rides and the like)
  • Ongoing medical costs (like medication)
  • Partial lost wages during the recovery period
  • Disability benefits for longer-lasting injuries

In the event that one of your staff members takes legal action over an injury, this insurance policy can also help your company afford attorney’s fees, court costs, and settlements.

Technology errors and omissions insurance

Since they are involved with both the healthcare and technology industries, healthtech companies are uniquely vulnerable to lawsuits and claims related to client dissatisfaction with their services. To get protection from these claims, you’ll need technology errors and omissions (E&O) insurance.

Unlike most E&O insurance policies, technology E&O insurance includes third-party cyber liability insurance coverage. This form of coverage—which helps cover legal expenses resulting from data breaches and cyberattacks—is a must for healthtech companies and other businesses that must protect their users’ security online.

Cyber liability insurance

Having a technology E&O insurance policy will help you deal with the consequences of cyberattacks, but this form of insurance won’t fully cover this risk on its own. Because of that, it’s also wise to invest in first-party cyber liability coverage. Unlike a third-party cyber liability policy, first-party cyber liability insurance is designed to cover your company’s own expenses in this situation.

When your business has a first-party cyber liability insurance policy, it will get financial help with:

  • Ransom payments
  • Lost revenue as a result of business interruptions
  • Notifying customers, vendors, and other impacted stakeholders
  • Forensic investigations
  • Asset/data recovery
  • Hiring PR professionals to manage reputational damage
  • Protection services for stakeholders, including credit monitoring

Directors and officers insurance

Any company with a board of directors should have directors and officers (D&O) insurance. With this form of insurance in place, your healthtech company will get help with legal costs related to the actions of your board members and officers. That includes protection from lawsuits tied to:

  • Employee grievances
  • Mismanagement of funds
  • Failure to follow company bylaws
  • Alleged libel, slander, and copyright infringement
  • Failure to comply with regulations

Employment practices liability insurance

Employment practices liability insurance claims are particularly common in the healthcare industry, and that extends to healthtech. Fortunately, employment practices liability insurance can help healthtech companies deal with lawsuits focusing on:

  • Wrongful termination
  • Sexual misconduct/harassment
  • Discrimination
  • Invasion of privacy
  • Defamation of character

How much does it cost?

To benefit from comprehensive insurance coverage, your healthtech company will need to invest in the policies listed above. On average, here’s how much these businesses pay for:

  • General liability insurance: $42/month (for small businesses)
  • Workers’ compensation insurance: Classification rate X experience modification rate X payroll/100
  • Technology errors and omissions insurance: $67/month
  • Cyber liability insurance: $148/month
  • Directors and officers insurance: More than $500/month (for technology businesses)
  • Employment practices liability insurance: $222/month (for small businesses)


Like the tech industry as a whole, healthtech has shown no signs of slowing down anytime soon. That said, businesses in this industry can’t eliminate the risks they face on a daily basis. 

Instead, these companies can mitigate their risks by purchasing general liability insurance, cyber liability insurance, employment practices liability insurance, and other policies. When they do, they’ll be able to focus on developing and selling the best possible healthtech products and services.

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