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Technology Insurance
Frequently Asked Questions |
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Why is Technology insurance needed? What sort of need exists for this coverage? Is there a standard insurance policy for this type of coverage? Are some forms better than others? What areas of exposure should concern the commercial customer? Is it possible to obtain coverage for first party exposures such as my system being attacked by outsiders?
What is involved in obtaining a quotation for this type of coverage? |
In California:
BSR Insurance Services
CA Lic # 0E72686 |
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Why is Technology insurance needed? |
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Perhaps a more descriptive term for this form of liability insurance is Technology and Information E&O Liability Insurance. This coverage transfers the liability risks associated with wrongful acts committed by:
- technology professionals who are in the business of providing advice and counsel in the creation and operation of computer systems and software including such additional activities as Internet Service Providers
- those who collect and aggregate private information about individuals which might be wrongfully distributed to third parties
- those who operate computer networks and fail to keep them secure
- those who operate websites that contain information that is the intellectual property of others or who commit acts of liable, slander, or defamation via these websites
- those who wrongfully acquire the intellectual property of others
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Applications and forms viewable with Adobe Reader
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What sort of need exists for the coverage? |
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There has been rapid growth in recent years of businesses that handle "information". That information often involves personal information, financial information, or government related information. Most businesses now handle and aggregate one form of this information on a routine basis as a part of their day to day operations. HIPPA and fourth amendment requirements along with other state statutes guarantee individuals the right of privacy associated with their personal information. Failure to keep such information secure creates substantial liability exposures.
Most businesses now utilize computer technology to manage the ample supply of data that flows through their operations. E-mail transmissions are a part of every commercial enterprise and most businesses now own websites, some of which enable online transactions. Failure to keep information secure regardless of the reason, misuse of the intellectual property of others, and failure of computer systems to operate properly can lead to a wide variety of liability exposures that are not generally covered by traditional insurance. CGL policies contain language that restricts coverage for what are defined as advertising exposures and when a PD claim in launched CGL forms require physical damage to tangible property. It is very difficult to hold "data" in one's hands. Finally, most CGL forms exclude professional or E&O claims. |
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Is there a standard insurance policy for this type of exposure? |
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No. There is no standard policy. Coverage for these type exposures has evolved to the point that several insurance companies provide it, but each has its own way of offering the coverage. |
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Are some form better than others? |
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Each carrier writing this form of insurance will probably proclaim its form is the best; however, such a claim is probably dependent on the type of risk being addressed. These policy forms have developed primarily through the surplus lines marketplace because of the freedom of rate and form granted this segment of the market. Admitted forms are now available, but they may not offer the coverage needed in a specific situation. |
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What areas of exposure should concern the commercial customer? |
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Network security, data privacy, media and online content, loss of income by third parties, disruption of service to and loss of data by third parties, theft or misuse of intellectual property of others, defamation, liable, and introduction of malicious code such as viruses, worms, etc. are all potential liability exposures to businesses. These can come through e-mail activity, online transactions, disgruntled employees or former employees, system or software failure, websites, and other sources as well. Businesses which are engaged in software development, consulting, network architecture, etc. and ISP activities also must deal with the E&O exposures generated by their work. |
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Is it possible to obtain coverage for first party exposures such as my system being attacked by outsiders? |
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It is possible to obtain first party coverage but it is very expensive and time consuming. It will generally involve an inspection of the property to be insured prior to quotation (the inspection cost to be borne by the insured) and coverage may not be offered at the end of the day. |
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What is involved in obtaining a quotation of this type of coverage? |
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The simplest process is to obtain an application form a BSR representative or from our website, complete it, and forward to our office. You may use our e-mail address submit@bsrins.com to forward the application to us or fax it to 615-264-3980, or mail it to us at P.O. Box 768, Hendersonville, TN 37077-0768. |
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Please remember that each situation is unique. This page is provided for informational purposes only and does not constitute legal advice. Do not hesitate to contact us regarding your particular situation. |
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