Building a service-based app can seem like a pretty safe business idea. Not only are you creating a digital product that doesn’t require a physical storefront or inventory. But you also have the flexibility to scale quickly and earn a healthy profit to deal with any problems if they ever arise. The problem with this mindset, however, is that it’s completely wrong. For any business, it’s not a question of if problems will arise, but when they will arise – and the important thing to note is that they could arise far sooner than you think.
If you’re building a service-based app, you need to understand that, beneath the surface of that business, there’s a complex web of potential liabilities, especially when it comes to your team and the services they provide. That’s why understanding team liability and insurance before you launch the app is so crucial. If you take the time to familiarise yourself with the landscape and properly assess the risks you’re going to face, there’s every chance you can put the right protections in place to protect yourself. And also to make sure your business is prepared for the long term. So what exactly do you need to know?
Insurance Types
The first thing you need to know is what kind of insurance is waiting in the wings. For most app-builders, small business workers comp insurance is a must-have if you want to protect your employees and ensure they’re covered if anything goes wrong, but there’s also general liability insurance – key for protecting your business against claims involving damage – professional liability insurance – which can protect you if a client claims your app or service caused them financial loss – and cyber liability insurance – crucial if your app handles a lot of user data.
All of these insurance policies will play a big role in safeguarding your company against common risks in the app development world. So you should be looking into all of them before your app even goes live.
Team Liability
If you’re unsure what we mean by ‘team liability’, then this is another thing you’ll need to familiarise yourself with. When building a service-based app, every team member’s actions can affect the business legally and financially. For instance, if a developer makes a mistake that causes a security breach or a service failure, the entire company can be held liable and potentially lose out on clients and revenue. Employment status also matters here.
Whether your team members are employees, contractors, or freelances, your liability exposure can vary greatly. For example, employees typically require workers’ comp insurance, while contractors might need their own insurance. So knowing the difference between each policy is crucial if you want to protect both them and yourself from financial or reputational issues.
The Service-Based App Landscape
Apart from this, it’s also important for founders of a service-based app to understand the landscape they’re stepping into. As we mentioned before, you could lose out on a lot of revenue. And by extension, your established reputation – if anything happens to your customer data.
With cyber breaches growing more common, especially for small and medium-sized businesses, the risks are far higher than you might anticipate, so it’s your job to acknowledge this and make sure you do everything you can not just to keep client data safe, but to protect your team from the consequences of potential mistakes or oversights.
This means putting the right technical safeguards in place – things like data encryption, access protocols, secure APIs – but also backing that up with clear policies, team training, and the appropriate liability insurance. If you have all of that, then even if a data breach does occur, your business is far more likely to withstand the fallout.
Conclusion
The bottom line is that building a service-based app comes with a lot of responsibilities. The last thing you want is for something to go wrong as, in the world of tech startups. Just one small mistake can quickly snowball into bigger issues – and when you’re all liable, you’re all going to be feeling the effects.
nandbox App Builder
The platform facilitates the implementation of secure APIs, data encryption, and appropriate user access controls. All of which are critical for reducing liability risks. Additionally, it provides a robust underlying infrastructure. Regardless of whether you are collaborating with full-time employees or external contractors, nandbox App Builder simplifies the process. Like developing professional, compliant applications that are predisposed to comply with legal, insurance, and cybersecurity regulations from the outset.
