John (not his real name) is an independent IT consultant. He has 25 small business clients that call him when they need network upgrades, computers added or upgraded, virus protection installed, etc.
He started out small and grew the business by providing great service at a reasonable price. Several years ago he purchased a business liability policy because one of his customers asked him to provide proof of insurance before they would allow him to work in their premises.
Unfortunately, that policy provides almost no protection for the types of risk exposures that he has. It provides protection for property damage, bodily injury and personal injury caused as a result of something he does in his line of work.
What his business liability policy does NOT cover:
- The backup system that John installed and thought he adequately explained to the customer how the tape rotation should work. Only after a massive data loss did they find out that the last good backup was 3 weeks old. The customer sues John for $70,000 – the cost to reconstruct and re-enter all of that data.
- John installed virus scanning on all of a customers computers and server. An employee brings their infected personal laptop to work and it proceeds to send virus emails to everyone in the company email directory. The customer sues John because their understanding was that they were completely protected.
- While programming back-end access to customer data from their public web site, John inadvertently allowed private information to be available to the public for 24 hours. The customer sues John for the costs to notify their customers of the data breach, provide credit monitoring services and everything else that the new data breach laws require.
The Solution Is A Technology Errors & Omissions Policy
Coverages include:
- Technology Product and Service Provider Errors and Omissions. This includes coverage for professional services you provide including:
- Internet services, internet service provider, application service provider, web site hosting, web page design and development, domain name registration, etc.
- Document imaging services
- Information system outsourcing
- Manufacturing, developing, designing, licensing or leasing computer hardware, software, firmware, components and peripherals. Electronic telecommunications equipment and wireless.
- Transmission of malicious code from the Insured’s system to a third party computer such as a virus, worm or Trojan horse; or
- The obstruction or corruption of authorized communications between the insured’s computer system and that of another.
- Misappropriation, theft, corruption, destruction, manipulation, deletion or unauthorized access to and use of personally identifiable information.
This coverage includes:
- plagiarism, misappropriation, or unauthorized us of ideas, names, styles, formats;
- Piracy, interference, infringement, or dilution of title, slogan, domain name, advertising material, trade name, trade secret, etc.
- Disparagement of another’s products or services, or defamation, or infliction of emotional distress.
