Professional Technology Services Insurance providers, such as data storage, website designers, and software developers, can get technology insurance, a relatively new insurance product. Errors and omissions (E&O) coverage for other professionals is similar to technology insurance. E&O coverage is a type of insurance that protects professionals from claims arising from their failure to deliver or execute their professional services.
What Technology Insurance Covers?
- Damages for various events stemming from software or hardware failure are likely to be included in an E&O claim against a technology professional. Hacking and theft of client information or client customers’ information, notification of people impacted, credit monitoring expenses, lost income owing to failure to meet a deadline, or even a claim based on intellectual property rights could be grounds for a claim. Consider the well-publicized hackings and data breaches that prominent organizations have endured in recent years.
- Banks, retail enterprises, and government contractors were among the targets. Businesses in those circumstances were required to tell millions of customers about the breach and give credit monitoring services for longer periods. Businesses had to divert resources while they tried to remove malicious code and restore normal operations, resulting in a loss of production during that time. These things happen regularly.
- Even if the problem results from a programming or operational error rather than a bad actor, the customer will still lose productivity and other intangible losses. In each of these circumstances, the target company is likely to file a claim against the technology service provider(s) responsible for the company’s data security. The client’s claims apply to any contractor or subcontractor that delivered security software, licensed the software, and maintained the hardware.
Here’s a rundown of some of the different types of technology coverage insurance available:
- E&O – assists in covering the costs of liability claims brought against your technology company.
- Coverage for Data Breach – assists with the costs of alerting individuals whose personal information has been taken, managing public relations, and good faith advertising.
- Business Income Extension for Cloud Service Outages can help compensate business income losses caused by cloud service outages. For example, suppose your technology company relies on a cloud service to store customer data, and that service goes down. In that case, you may not meet consumer demands and lose business.
Benefits of Having Technology Insurance Coverage
Legal defense is taken care of
With technology insurance, regardless of the claim’s merit, the insurance policy pays to defend you. You would have to pay for your defense if you didn’t have insurance, which might be quite costly. It could be enough to push your company into bankruptcy and cause it to close at a significant cost to the owners.
Losses will be compensated
The insurance will not only cover the cost of your defense. Still, it will also assist you in paying any amounts necessary to satisfy a claim or a monetary judgment against you.
Demonstrate that you are a trustworthy business partner
If you have Technology Services Insurance, it signifies the insurance company thinks you’re a responsible professional who backs up your work. If you were not a trustworthy businessperson, you would not have been willing to pay for insurance, and no reputable insurance firm would have insured you.