Is Tech Errors & Omissions the same as Professional Liability?
Yes and No. Professional Liability insurance policies encompass a wide variety of professions and are dubbed different things by the different industry sectors. Folks like attorneys and CPAs call it Professional Liability Insurance. Doctors and dentists call it malpractice insurance. Most other industry sectors call it Errors and Omissions insurance. The general premise of all these policies is the same however the specifics of their coverage vary greatly and are tailored to the industry sector.
I have Product Liability insurance, so why do I need Technology Errors and Omissions Liability Insurance?
Product liability insurance policies typically cover bodily injury and tangible property damage caused by your product. Since most technology products and services do not give rise to bodily injury and tangible property damage, the technology errors and omissions insurance policy is designed to cover the more common causes of loss – intangible property damage, financial loss, intellectual property infringement, media liability, failure of the technology to perform as intended, or simple errors or omissions. The Tech E&O insurance policy will provide coverage for the defense costs related to allegations of an error or omission as well as the defense thereof.
How is Technology E&O Insurance Premium Determined?
Many factors are considered in determining the cost, or premium, for an errors and omissions insurance policy. Applications are evaluated on their individual merits as well as their industry segment. A technology company's revenue, years in business, insurance claims history, location, number of employees, and risk management procedures are all factors in determining the liability insurance premium. These factors are then evaluated within the context of the technology industry segment to determine the insurance cost. For example, internet companies generally have greater exposures than IT consultants. That increased exposure is reflected in the insurance premium.
What is the difference between a First Party E&O Insurance Policy and a Third Party E&O Insurance Policy?
A first party errors and omissions liability insurance policy covers direct financials loss that you incur as a result of loss or damage to your assets, the expenses associated with getting the business back on track and the loss or earnings and costs from the interruption of the business. Examples of losses that might occur and that first party E&O liability insurance would cover include costs associated with data loss or damage, recovery expenses, loss of existing business and reduction in new business.
A traditional third party technology errors and omissions insurance policy covers losses that result from an action against you by someone else who is usually seeking compensation or damages that they believe you have caused them. Examples of actions that someone might pursue against you include failure to deliver as promised either service levels, products or contracts, publishing liability for defamation, libel or slander. A traditional third party liability insurance policy of this type would also cover infringement of privacy rights.
Why is liability insurance coverage for an Internal Breach of Security important?
The coverage of Internal Breach of Security liability insurance policies typically includes losses arising out of your technology company’s failure to prevent your employees from unauthorized access to, use of or tampering with computer systems. Insurance coverage for Internal Breach of Security is sometimes included in the liability policy form, depending on the insurance company, or it can usually be endorsed if it is not automatically included in the insurance policy for an additional premium.
Costello & Sons Insurance will work with you to quote a policy that includes the technology insurance coverage you need for issues such as network business interruption, intellectual property liability, personal injury and privacy liability, copyright of software code, cyber extortion, and network security liability. Learn more about technology errors & omissions insurance, or apply now for technology errors and omissions insurance coverage to protect yourself and your technology company from the serious risk of professional liability issues.