Tech Insurance Terms to Know
Technology companies own valuable intangible assets, such as sensitive
data, software and intellectual property, which a general liability policy
doesn’t account for. General liability provides protection in the event of
bodily injury or property damage. Technology insurance coverage is designed
to protect against the significant risk of economic loss related to
intellectual property, network liability and network and cyber property
A comprehensive risk management plan needs to guard against the unique
exposures that technology operations present. Specialized technology
insurance is relatively new and the terminology is still evolving as more
claims are handled and new exposures are discovered. As a result, the
terminology can be confusing and hard to understand. The following terms
are some of the most common you will need to know to best understand your
technology insurance protections:
A cyber liability policy is a coverage that protects against damage
from cyber-attacks, data breaches and other basic risks that result
from using electronic communications and data storage. They often cover
the cost of recreating damaged or lost data or systems, but do not
include the costs that stem from the loss or damage, including legal
expenses and data notification costs. Sometimes the term cyber
liability is used broadly to describe technology related risks and
technology specific insurance in general.
Data breach notification laws:
These state laws dictate the requirements for notification if an
organization were to suffer a data breach that compromised personal
data, such as social security numbers and financial and health
information. Each state law varies on the time period that individuals
need to be notified of the breach and what situations are exempt from
The intangible property your company owns. This can include websites,
data and networks. These intangible assets can all be damaged. To
protect your cyber property you may need to broaden the property
enhancements on your existing policy. Also, check if you have any
coverage that would protect if your company or an employee caused
damage to another organization’s cyber property.
Technology errors & omissions (E&O) coverage protects against
claims by a client that suffered a loss due to mistakes by your
company. These mistakes must be due to error or oversight in a product
such as a software program or web service.
Media and intellectual property liability:
All content on the Internet is considered to be published, meaning it
is subject to copyrights and infringement. Negative content about a
person or company can be considered libelous. Take caution when
publishing or posting anything to websites, forums or social networking
The exposures and threats of technology business operations will continue
to grow as the technology industry does. GDI Insurance Agency, Inc. can
help you keep your business protected against these specialized risks.
Technology Professional Liability: Errors and Omissions Coverage
Every business has unique risks that can seriously harm an organization’s
operations if not properly protected against. As a business utilizing
technology to produce and deliver products and/or services, it’s important
to recognize and take precautions against risks that your commercial
general liability (CGL) coverage doesn’t include. Technology professional
liability coverage, also referred to as tech errors and omissions insurance
(E&O), is essential for companies using technology because it addresses
a lack of protection in CGL policies, which typically do not cover claims
of third-party financial harm.
Who needs Tech E&O Coverage?
Not only technology industry businesses have technology-related risks. Most
companies today utilize technology in some part of providing a service or
product and need to take the necessary precautions. To ensure your company
is covering all bases, a full risk management assessment is needed.
What does Tech E&O cover?
Tech E&O manages risks, resulting from providing a product or service
to a third party that are not covered by a CGL policy. Specifically, tech
E&O protects your business in the event that a third party suffers a
financial loss due to your product or service not performing as it was
intended or expected, including the event of an error or omission committed
by your company. These policies also cover defense costs in the event of
Tech E&O coverage would apply in the following situations:
- A mistake was made and an error in the code of a website or program your
company produced isn’t found before it is implemented. A third party
depends on this product or service to operate its business and its
operations are stalled due to the error, causing them a financial loss.
- A part your company produces is installed in a piece of equipment. After
a short amount of time, the component simply stops working, causing the
equipment to fail to work, but otherwise not damaging anything or hurting
anyone. The third party that relies on this equipment for its business has
to stop operations and suffers a financial loss.
- An employee of your company recommends that a client make an adjustment
to its network. The client follows the advice and its network crashes as a
result, causing a time and financial loss for its operations.
In all of these cases, Commercial General Liability insurance coverage would not cover a claim or any costs of
litigation because of the presence of an error and the lack of resulting
physical damage to the third party’s property. It should be noted that tech
E&O policies usually exclude product recall, but some will accept
damages for loss of use of a failed product.
You can quote and buy insurance for your MicroTek business 24/7:
Cloud Providers, Application Service Providers, and/or Software as a Service | Consulting, Training, Project Management, and/or Staffing | Data or Records Storage, Retrieval, and/or Back-up | Database Administration | Hardware Evaluation, Selection, and/or Maintenance | Hardware Manufacturing | Help Desk Services | Internet Service Providers (ISPs), Search Engine or Online Publishing / Sales | Network Security or Computer Security | Software Development, Installation, and/or Sales | Systems, Network, or Audio-Visual Evaluation, Design, Cabling, and/or Support | Web Design, Development, and/or Hosting | Search Engine Optimization | etc.