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a division of Associates, Inc. 
Technology Insurance
Loss Scenarios for IT Firms
  Personal Injury/Privacy
An e-tailer brought suit against a web designer for damages the e-tailer sustained as the result of the unauthorized access of its private data files by a "hacker". The suit alleges that the web designer negligently designed the e-tailerīs web site by not providing adequate safeguards to prevent such type of intrusion.
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The Cost of Litigation

 

The cost of litigation to information and network technology companies has risen dramatically in recent years as a result of product and service disputes. Why are we seeing this sudden influx of lawsuits?

More and more customers are willing to sue long established business partners for performance failure problems. The result: an increase in business partner litigation.

Dramatic increases in the average size and length of contracts raises the plaintiff's chance that a performance failure “will be worth the fight” and result in a large jury award.

As market competition continues to increase, there is a greater chance that marketing and sales pressure will invite over-promising of supplier capabilities.

With companies putting more reliance on information technology solutions, it increases the likelihood that software solutions will be core business solutions. As a result, much more is it at stake if the solution fails or doesn't perform as promised.

Today companies are crossing borders to conduct business which brings a host of new exposures due to foreign laws and regulations.

Information and network technology companies need timely solutions that have evolved with their industry and the new exposures being presented. InsureCast's information and network technology errors & omissions (E&O) insurance offers such solutions and can help protect your firm from the devastation of a lawsuit.

Take a look at these loss scenarios and then ask whether you have the proper insurance protection.

 
 
 

Loss Scenarios for IT Companies

 

Corrupted Data

A communications company sues for lost revenue and expenses to recover billing files for wireless customers that were deleted by their software vendor who was updating the system.

Indemnity Paid: $750,000
Defense Cost Paid: $150,000

 
 

Software fails to maintain employee hours

A company provides timekeeping hardware and software to its customer. The software doesn't function correctly; it fails to maintain employee hours worked and to correctly apply the hourly and overtime rate of pay. The failure results in over/underpaying employees and the need to replace the timekeeping clocks. The customer sues the provider of the hardware and software

Indemnity Paid: $440,000

 
 

Missed deadlines cause a breach of contract

A firm outsources to an information technology and management service company for the replacement of hardware, software and infrastructure as well as telecommunications and related services in order to upgrade its ability to serve customers and address any problems. The information technology and management services firm fails to meet deadlines due to a high turnover of staff and a breakdown of project management.

Indemnity Paid: $2,000,000
Expense Paid: $500,000

 
 

Lawsuit in France

A software developer is sued in French courts for failing to deliver an operational version of a software system. The plaintiff alleges that the system sold and installed was not compatible with their mainframe systems, despite assurances to the contrary. The plaintiff sues for recovery of consequential damages.

Indemnity Paid: $600,000

 
 

Breach of security

A telecommunications firm is sued by a customer claiming they were sold a defective system with inadequate security protections. The customer claims the faulty system allowed individuals to access their phone system and, as a result, they incurred fraudulent overseas charges.

Indemnity Paid: $3,450,000

 
 

Defending software that performed as promised

A software company was sued by a customer after he used the company's cost estimating software. The software itself was found to have functioned perfectly. The error was on the part of the user who later underbid a work project. The customer eventually dropped the case, but only after considerable legal expenses were incurred by the software company.

Indemnity Paid: $0
Defense Cost Paid: $175,000

 
 
Million dollar verdicts and costly legal fees can easily destroy a firm’s bottom line...if it’s not properly protected. Talk to InsureCast about our information and network technology errors & omissions insurance. Get the protection you need now. Please go to our online CoverageCoach questionnaire to get a free no obligation technology errors and omissions Insurance quote.
 
 
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If Disaster Strikes (PDF)
Why Private Firms should have D and O? (PDF)
Insurance Solutions for Private Companies (PDF)
 
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