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InsureCast
a division of Associates, Inc. 
Technology Insurance
Loss Scenarios for IT Firms
  Inability to deliver on marketing promises.
A personal computer assembler is sued by a group of consumers in a class action suit. The suit alleges that the company´s equipment did not live up to advertised specifications. Citing issues such as lack of speed and poor upgrade capability, they demand full refunds.
Indemnity Paid: $1,600,000
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Your Reputation

 

Your reputation is on the line every time you provide work for a customer. If a customer’s expectations aren’t met, they may seek their remedy in court. If one of your customers does bring a claim, we stand behind our reputation of fair and prompt

 

Cyberspace (Internet) Liability

The fastest changing area of liability today is cyberspace liability. The rapid explosion of persons getting on the Internet in the past few years has spurned the interest of businesses who are interested in promoting and marketing their products and services over the Internet. Cyberspace refers to the digital world represented by computer technology but more particularly to the access to the vast flow of information available on the Internet.

Only a few years ago only 12 million persons were accessing the Internet but now this number is over 60 million and growing at geometrical rates. Many companies are establishing home pages and communicate with others by means of e-mail, chat lines and bulletin boards.

Some companies have started to promote and market products and services on the Internet. Liability rules that applied to advertising injury, libel, slander, infringement of copyright and trade marks will have to be reformed to comply with changing conditions of online communication.

General liability policies provide advertising and personal injury coverages. Miscellaneous E&O insurance provides coverage for damages because of an error or omission for service provided to third parties. Media liability policies also provide coverage for defined named causes of loss and defense costs arising out of online transactions.

 
 
 

 

Why IT Firms Need Errors and Omissions Insurance

 

Errors and Omissions Insurance provides protection in the event you commit a negligent act or make an error or omission

If this error or omission causes a loss to a customer - professional liability Errors and Omissions provides coverage.

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.

The risk of legal assessments caused by programming or service mistakes makes professional liability errors and omissions 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. Professional Liability Errors and Omissions 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.

Errors and Omissions Liability Insurance coverage provides legal defense, as well as a financial coverage in the case of a judgment against you.

 
 

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

Means any form of defamation or tort related to: infringement of copyright (including software copyright), trademark, title, trade name, slogan, or service name; allegations of libel, slander, breach of privacy, product disparagement, trade libel; misappropriation of name or likeness or ideas, plagiarism, infringement of copyright, trademark, or negligence regarding the content of any media communication

For many information technology companies, the likelihood of Errors and Omissions claims is greater than traditional bodily injury or property damage allegations. For most software developers, computer consultants, Internet businesses and other technology companies; Errors and Omissions policies are the primary liability protection.

As with other types of insurance, buyers should be sure that E&O insurance coverage is tailored to their particular needs.

For free risk analysis of your risk exposure and need for E&O, please try our Coverage Coach questionnaire - which will give you recommendations and the option to apply for a 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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