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InsureCast
a division of Gaston & Associates, Inc. 
Technology Insurance
Loss Scenarios for IT Firms
  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. The customer sues the provider of the hardware and software.
Indemnity Paid: $440,000
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Why IT Firms Need EO tech?

 

The risk of legal assessments caused by programming or service mistakes makes EO tech insurance an absolute necessity in the IT business. Even with IT work that seems less risky, there’s no outsmarting the consequences of a lawsuit. Practically any firm or individual that improperly performs services can cause a client to suffer economic loss.

Commercial General Liability does NOT provide coverage for programming errors, contract performance disputes or any other Professional Liability issues. IT consultants and companies who have General Liability without Professional Liability (Errors or Omissions) coverage are taking a serious risk. Even if you’re not at fault, litigation is time-consuming, costly and potentially disastrous to your firms reputation. E&O insurance is a cost effective way to protect your business.

Typically, a general liability policy does not cover consequential financial loss, and most exclude claims arising out of professional services. To properly cover your exposures, you need comprehensive Errors and Omissions coverage in addition to your existing General Liability Policy. Optional coverages may include Media and Network liability.

 

Network Security Liability

Can be Transmission of malicious code (i.e. computer virus), security breach of your network by a hacker, or unauthorized access to, use of, or tampering with data or systems.

 

Media Liability

Can be Transmission of malicious code (i.e. computer virus), security breach of your network by a hacker, or unauthorized access to, use of, or tampering with data or systems.

 
 
 

Professional Liability Insurance: Technology E&O Insurance

 

What is Technology E&O Insurance?

Technology E&O professional liability protects your company from claims if your client holds you responsible for programming errors, software performance, or the failure of your work to perform as promised in your contract.

Coverage includes legal defense costs - no matter how baseless the allegations. E&O insurance will pay for any resulting judgments against you, including court costs, up to the coverage limits on your policy.

Coverage extends to both W2 employees and 1099 subcontractors, and can be worldwide in scope.

 
 

When do I need technology E&O insurance?

We generally recommend technology E&O professional liability insurance coverage be at the foundation of every technology company’s insurance portfolio. Usually it is wise to purchase the coverage prior to product or site launch, or when you have customers.

It can be required by web hosting companies like Exodus or Globix, as well as by investors, particularly VC’s.

 
 

Why do I need technology E&O insurance?

Don’t Be Fooled. Professional Liability Insurance coverage is not provided by a Commercial General Liability policy. Commercial General Liability does NOT provide coverage for programming errors, contract performance disputes or any other Professional Liability issues. IT consultants and companies who have General Liability without Professional Liability (Errors or Omissions) coverage are taking a serious risk. It’s like a doctor practicing medicine without Malpractice insurance.

Mistakes Happen. Every company messes up at some point. For example, you recommend to a client that they run a certain test of their system, after you did some extensive work on it. The client takes your advice, the system crashes, and they are unable to conduct business for a whole week. The client becomes enraged, calls his attorney, and looks to you for reimbursement.

You Can’t Be Everywhere. Sometimes you can’t personally handle every job. E&O coverage insures not only your mistakes, but also the mistakes of the employees and Independent Contractors you hire.

Most Importantly: Technology E&O professional liability insurance might save you from extreme embarrassment, a lost client, or worst of all, a bad reputation.

 
 

IT and technology professional service providers operate in a perilous business climate - professional liability insurance will help protect your business

It’s a competitive business environment. Your service standards and reputation are what set you apart from the competition. Customers demand more and expect more. They are not easily pleased and when their expectations are not met; a dispute may arise. They may seek their remedy in court, believing your company’s assets are an available source of relief. IT and technology professional service providers operate in a perilous business climate characterized by:

  • Higher service expectations
  • A societal belief that there’s always a “deep pocket”, and
  • Ever escalating awards and settlements

When you are faced with a lawsuit from a customer, win or lose, the financial ramifications are serious. Every company wants to mount and fund the best defense possible. But sometimes even the best efforts aren’t enough and a company may face costly damages, in addition to legal fees. InsureCast crafted technology E&O professional liability insurance coverage for the unique exposures of technology firms. We specialize in offering liability insurance protection for technology, IT, Internet, software and bio-tech firms. Please go to our online CoverageCoach questionnaire to get a free no obligation Technology E&O Insurance quote.

 
 
News & Articles
Multiple Places, Multiple Policies
Insurance Is Our Native Language
No Policy Covers Everything
Reality of Lawsuits
New Public Company Rules Hit Private Firms
But I Want to Fight, Not Settle Out of Court!
Professional liability insurance for IT Staffing Firms
Terrorism Insurance Finally Arrives
Business Risk Management Tips
Are You an Equal Opportunity Employer?
Lawsuit Costs
Privacy Disclosure Rules
Expanding Exclusions and Limitations
Is Your PR Hurting Your E and O?
Is Professional Liability Insurance needed?
Sufficient Limits Are Key
Overview and Current D and O Market Trends
Insurance Market Overview
Directors and Officers/EPL Market
Why IT Firms need EO?
If Disaster Strikes (PDF)
Why Private Firms should have D and O? (PDF)
Insurance Solutions for Private Companies (PDF)
 
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