Technology E&O Insurance
Technology Errors and Omissions Insurance covers economic damages stemming from negligence. And, sometimes is is extended to cover some contractual liability as well as some intellectual property and privacy and security risks. The core negligence coverage provided by E&O Insurance can be useful, even for those with General Liability Insurance, because those policies were not designed to cover economic damages caused by technology professional services. Typically, the General Liability Insurance Company will put a professional services liability exclusion on the policy.
Anyone who provides technology services is subject to claims of negligence. This is true even in domains where professional standards do not exist. So the exposure, although different, extends beyond engineers and other licensed professionals to all providers of professional services, including technology professionals.
Many companies who hire contractors to perform technology services for them recognize this and require those contractors to obtain Technology E&O Insurance. Some carefully stipulate the types of coverage they want included in that policy. Others simply state that E&O Insurance or Professional Liability Insurance is required.
Whether you are interested in protecting yourself against particular exposures, or you have signed a contract with a client that requires you to carry E&O Insurance, or both, we can help you by getting multiple proposals from competing insurance companies. Proceed directly to Errors and Omissions Insurance Quotes to get the process started. Or read more first.
Coverage against claims of negligence is at the core of an E&O Insurance Policy. This coverage is for economic damages, and does not usually extend to Bodily Injury or Property Damage Liability. Personal Injury Coverage, for things like slander or false imprisonment may also not be covered in many Errors and Omissions Insurance Policies.
Contractual Liability Coverage
There are many forms of contractual liability. In the context of Technology E&O Insurance, what we are looking at is the possibility that a client who is unhappy with the professional services provided may seek damages for economic losses. Sometimes a case can be made for a breach of contract rather than negligence.
In a few states, a new sort of concept has arisen that is a sort of cross between negligence and contractual liability. This mongrel concept has been called “negligent breach of contract.” That area of the law is still developing. But if you are in a state where that is a concern, it may be wise to get coverage that provides coverage for negligence and for some contractual liabilities.
For these reasons, if you are concerned about the quality of the coverage you purchasing, you should carefully consider whether a proposed insurance policy would cover some forms of contractual liability.
Coverage Against False Advertising Claims
Sometimes an unhappy client can also construct a claim relating to false advertising or unfair business practices. Basically, these allegations claim that the professional services did not measure up to what was promised or advertised. So, even though the services might not have violated the written contract or have been delivered in a negligent fashion, an unhappy client may have other avenues to pursue you legally.
Intellectual Property Coverage
Intellectual property claims against technology professional services providers have been increasing at a staggering rate. It is probably the case now that for most professional service providers, the intellectual property risk is bigger, sometimes much bigger, than the risk related to negligence.
While E&O policies never cover Patent Infringement, of then they can be configured to cover copyright and trademark infringement resulting from covered professional services. One form of coverage that can be obtained, but that is very difficult to get, is coverage for misappropriation of trade secrets. Alta has access to a policy that provides that coverage.
Professionals providing technology services, or making use of technology are partially exposed. So are professionals who create or provide content, artistic work, or designs.
E & O Policies that cover some intellectual property claims can be significantly more expensive than a bare bones policy just providing coverage for negligence.
Again, if you are interested in the quality of the coverage you are obtaining, you should make sure that these exposures are covered. Also, companies requiring E&O Insurance of their independent contractors are often aware of this and require that this coverage be provided.
Privacy and Security Coverage
Privacy and Security exposure is particularly acute for those providing technology services, or who make use of technology when providing services. Most of us are well acquainted with the possibility of the release of personally identifiable financial or medical information. But in addition, one can cause the release of trade secret information, or sensitive legal files. It is also possible to be held liable for the accidental transmission of a virus, even by email. E&O Insurance policies often include coverage for privacy and security claims. But these policies are more expensive, and the coverage must be read carefully. For example, policies may not cover the loss of trade secrets resulting from a breach. Or they may place sub-limits on particular coverages.
If you care about the quality of the coverage you are getting and feel you are exposed to this form of loss or allegation in the work that you do, you should work carefully with an expert to understand any policy you are being offered.
Privacy & Security has been getting significant play in the media. And many companies are requiring that their independent contractors, particularly technology contractors, carry this form of coverage.
Bodily Injury, Property Damage, and Personal Injury Coverage
In theory, a General Liability Insurance Policy is meant to cover bodily injury and property damage liability claims. However, as we stated, typically the General Liability Insurance Company will attach a professional services exclusion to the policy. For some technology areas, this can create a problem, because bodily injury or property damage can directly result from their professional services. Additionally, there are gray areas that should be addressed. For example, what happens if a client is upset about the professional services provided and has a heart attack?
Personal Injury Coverage (PI) includes things like slander. PI Coverage is tricky and should be read very carefully, as it could apply to the personal and advertising injury portion of the General Liability Insurance Policy or it could apply to the E&O Policy (if the E&O policy provides the coverage). Generally the idea is that PI in relation to the provision of professional services should be covered with the E&O and PI related to advertising and other activities should be covered by the General Liability Insurance.
As we indicated, certain professions are particularly exposed to these sorts of claims. For example, a what about the developer of an application for MDs? What if an error could result in harm to a patient? That is a bodily injury liability claim. A website designer could be accused of personal injury for desparaging content he served to his client – for example a feed he selected. And so on. Those in professions and technology areas such as these need to take particular care that important exposures don’t fall between any cracks that might exist between their General Liability Insurance Policy and their E&O Insurance Policy.
Once again, if you care about the quality of the insurance you are getting, and you feel you could be exposed to this for of loss or allegation in the professional work that you do, you should work carefully with an expert like Alta to understand and compare competing policies.
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