Is Tech Errors & Omissions the same as Professional Liability?
Yes and No. Professional Liability 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. Doctors and dentists call it malpractice. Most other industry sectors call it Errors and Omissions. 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 Tech E&O Insurance?
Product liability 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 Tech E&O 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 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 Premium Determined?
Many factors are considered in determining the cost, or premium, for an E&O policy. Applications are evaluated on their individual merits as well as their industry segment. Revenue, years in business, claims history, location, number of employees, and risk management procedures are all factors in determining the premium. These factors are then evaluated within the context of the industry segment. For example, internet companies generally have greater exposures than IT consultants. That increased exposure is reflected in the premium.

What is the difference between a First Party E&O Policy and a Third Party E&O Policy?
A first party E&O 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 include costs associated with data loss or damage, recovery expenses, loss of existing business and reduction in new business.

A traditional third party E&O 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 include failure to deliver as promised either service levels, products or contracts, publishing liability for defamation, libel or slander and it would also cover infringement of privacy rights.

Why is coverage for an Internal Breach of Security important?
Internal Breach of Security coverage includes losses arising out of failure to prevent your employees from unauthorized access to, use of or tampering with computer systems. Coverage for Internal Breach of Security is sometimes included in the policy form, depending on the insurance company, or it can usually be endorsed if it is not automatically included for an additional premium.

Errors and Omissions Insurance Providers

All errors and omissions insurance providers are challenged with providing prompt, thorough and detailed claims services and investigatory assistance.  Below are some examples of real life insurance claims for your reference.  We at CSI would work hand in hand with your errors and omissions insurance provider to make sure these matters were handled properly.

Failure to Disclose “Known” Conditions

A buyer of a property sues the seller, the listing agent and the buyer’s agent for failure to disclose a crack in the foundation of the home. The buyer found the crack in the foundation when he was replacing the flooring in the home. The buyer alleges that the seller should have known the crack was in the foundation as the carpeting that had been in the home at the time of the sale had been replaced during the tenancy of the seller.

Breach of Warranty and Misrepresentation

Plaintiffs, new homeowners, sued the real estate broker for alleged misrepresentations with respect to the overall dimensions, layout, description, and/or contents of the subject real estate property.  The lawsuit included several allegations of errors and omissions, including breach of warranty and misrepresentation and sought damages in excess of $500,000.

Failure to Disclose and Misrepresentation

A real estate agent with insurance failed to disclose to the plaintiffs that there was a dual agency relationship with respect to the plaintiffs’ sale of their home to a buyer represented by the insured.  Plaintiffs also claim that the defendants misrepresented that the buyer was “pre-approved” for the loan to purchase plaintiffs’ property and that the plaintiffs sustained damages as a result.  Plaintiffs’ counsel had been demanding $110,000 to settle.  The claim settled for $45,000 and legal fees and cost incurred totaled in excess of $13,000.

Failure to Disclose Pending Freeway Expansion

A Buyer sues a listing agent for failing to notify the Buyer of a proposed freeway on-ramp on land immediately fronting the property being sold. Generic disclosure was already made regarding freeway expansion, but the buyer alleges that the listing agent should have disclosed this information in the Transfer Disclosure Statement.

Breach of Fiduciary Duty

A buyer sues his agent alleging that he overpaid for the property he purchased. After the close of escrow, the buyer determined that he paid $15,000 more for the property he purchased compared to similar homes in his housing tract. The buyer alleged that his agent breached his fiduciary duty to the buyer to get the best pricing available. He further alleged that the agent failed to disclose the other “comparables” to him during the negotiation process.

A property management firm handles all the property management services for a development of single family homes and condominiums. One of the condominium buildings catches on fire and considerable damage results. In attempting to settle the fire claim with the building's insurer it is discovered that the insurance proceeds are inadequate to rebuild the building. A suit is brought against the property manager, and others, for failure to obtain adequate insurance on the building.

Personal Injury/Privacy Liability

An outsider hacked into a REALTORS® computer system and stole the personal information of that REALTORS® employees and clients. The hacker then posted this information on the Internet. As a result, the REALTOR® was sued by many parties alleging failure to protect their information, privacy violations, etc. The REALTOR® paid large sums of money to resolve this situation. The costs included the notification and ongoing credit monitoring of all affected individuals as well as defense and indemnity costs related to the lawsuits.

Technology Errors & Omissions
A custom software developer created software for an investment firm, and there was a code error. As a result, the software did not function correctly, and caused their client to make $500,000 in faulty investments. The client sued for damages.

Internal Breach of Security
An employee detonated a "logic bomb" which erased all of his company's contracts, including the proprietary software used by their manufacturing tools. In addition to monetary loss, the company was forced to lay off 80 employees and lost its competitive edge in the electronics market space.

Denial of Service Attack
A hacker overwhelmed several large web sites through multiple distributed denials of service (DDOS) attacks. The culprit hijacked various computers throughout the world to bombard target servers with seemingly legitimate requests for data. It is estimated that the DDOS attacks, which interrupted the sites; ability to efficiently conduct their business, caused over $1.2 billion in lost business income.

Personal Injury/Privacy
To promote its new software product over a competitor’s, a software developer claimed on their website that their new product had an important compatibility that it believed its competitor lacked. The competitor sued, contending that the software developer disparaged its products in its promotional material.

Intellectual Property
A technology firm ran banner ads on its website to announce a new service offered by one of its partners. The firm also included printed advertising for its partner in its own direct mailings. Unbeknownst to the tech firm, the advertising contains materials that your partner’s competitor claims it owns. The partner’s competitor sued the firm, contending that they were liable for damages caused by unauthorized use of the advertising material.

Cyber Extortion
A hacker stole 300,000 customer credit card numbers from an online retailer. The hacker then attempted to use the stolen information to extort $100,000 from the company. Upon the firm’s refusal to cooperate, the hacker posted 23,000 card numbers online. As a result of the charge denials, credit card cancellations and re-issuance, the online retailer suffered approximately $2,000,000 in lost income and third party damages.

Network Business Interruption
A hacker deletes vital application files from an e-commerce server, rendering the company’s online system useless for five days. Consultant’s fees to remediate the disaster climb, and the customers are unable to access the website. The result of the outage and lost business is $300,000.

Why do I need to purchase Technology E&O Insurance?

Technology errors and omissions insurance provides coverage that your commercial general liability insurance policy does not. It's critical that your company have technology errors and omissions coverage to protect you against liabilities not covered by your general policy, such as: contract performance disputes, programming errors, and any other issues associated with professional liability. Providing technology services and products to your customers when you don't have errors and omissions insurance is putting yourself in a dangerous position; you are taking on risk without the proper insurance protection should a mistake (or allegation of a mistake) happen. Don't put yourself and your technology company at risk! Get the technology errors and omissions insurance coverage you need.

Why Should I Choose Costello and Sons Insurance?

The unique landscape of the technology marketplace means that your company needs an expert in technology insurance to ensure that you have the insurance portfolio that covers your specific exposures. Costello and Sons Insurance is the expert insurance broker you've been looking for. We specialize in the needs of technology companies. In fact, we've been recognized by the National Venture Capital Association (NVCA) for our "best in breed" solutions and selected to be a part of TechAssure, a global group of elite insurance brokers specializing in venture capital, private equity, and technology companies. You can rest assured that we will help you select the insurance policy that truly fits your situation and that we will work hard as your advocate should you need to file a claim. Costello and Sons Insurance is your partner in the insurance marketplace. Get started today with your application for technology errors and omissions insurance coverage.

The Right Technology Errors and Omissions Insurance Coverage

As a technology company, you're in the business of innovation, and innovating means taking risks. In the quickly changing environment of today's technology industry, protecting your company against constantly evolving threats is imperative. The growing number of occurrences of security breaches and data theft makes network security insurance coverage an important part of your company's technology errors and omissions policy. As the importance of online social networking in technology companies' reputation management continues to grow, cyber liability insurance is increasingly important as well. At Costello & Sons, our experience in the technology insurance market means that we understand the exposures that your company encounters as well as the insurance contracts that will offer the best protection against your specific risks.

Technology companies face unique liabilities, so specialized insurance coverage is important. No matter what size your technology company is or what part of the industry your operations involve, Costello & Sons can find the errors and omissions insurance policy that meets your needs at a competitive price. We will work with you to quote an insurance policy that includes all of the technology coverages you need.

As you work to grow your technology business, don't let concerns about errors and risks slow your progress; know that your company and its innovations are protected by the right errors and omissions insurance policy. The same technology errors and omissions insurance coverage isn't suitable for every company, so let Costello & Sons Insurance find you the policy that's right for you. We make the application process quick and easy. Choose your company's specifications above and get your insurance application started now.