First party claims deal with the costs to repair your business. In most states it is law to notify all customers of a breech and offer credit monitoring services for up to a year. Most policies will also cover the cost of hiring a Public Relations Firm to help restore the reputation of your business.
Third party coverage would cover legal expenses if you are sued and some of the damages awarded in such cases. It does not cover the up front costs of dealing with a breach. Think of it this way. If you own a home that has a leak in the roof you need insurance to cover the roof to be fixed. This is an example of first party insurance. If you are the architect who designed the house you could be held accountable for a design defect and need insurance to cover your work. This is an example of a need for third party coverage.
General Liability Insurance covers third-parties from injuries and damages to their property. It will also cover personal injuries caused by advertising, slander. or libel.
General liability insurance does not cover professional advice, autos, employee related injuries or liabilities, and damage to the businesses own property.
Most Technology companies have a direct need for more coverage. Depending upon the level of risk your business takes you may need Technology Errors and Omissions (E&O) coverage, Cyber Security Coverage, Information Security and Privacy Liability Coverage, or Cyber-extortion Coverage.
Technology companies frequently have unforeseen risks. Umbrella and Excess Liability coverage are designed to add coverage in addition to the limits of your existing Technology Insurance Coverage.
Many business owners assume that an umbrella policy is the same type of coverage as an excess liability policy. Both policies are used to increase the limits of liability coverage over the top of other primary polices such as general liability and commercial auto. However, their are a few key differences between each type of policy.
An umbrella policy adds additional layers of coverage to the limits of an insurance policy, but it also adds additional coverages that were not covered by the primary polices. An excess liability policy is more restrictive than umbrella coverage because these policies only increase the limits of insurance on the primary business liability coverage. They do not offer any additional coverage features or benefits.
Ironically, an umbrella policy is often less expensive than excess liability coverage.
An insurance certificate is a one page document issued by an insurance company or agency that serves as proof of insurance coverage for your business.
The most common requests for insurance certificates are for contractors and sub-contractors. General contractors, individuals, and business owners often require certificates of insurance to ensure that anyone doing work for them, or on their property, has adequate coverage in place.
A certificate of insurance is a common document issued for business owners. It is typically issued to a third-party, and will often name the third-party as additionally insured for work done on their behalf. A certificate serves as a summary of all active coverage and is much easier than wading through various policies to validate coverages.
A certificate of insurance should list all lines of coverage for your business. It will also list the amount of coverage and limits of insurance. Some certificates may include special language with the certificate to further protect the individual or company requesting the certificate.
Certificates are important to protect your business. If a contractor or 1099 worker is doing work for another business without coverage, that business may be legally and financially liable for any accidents or injuries.
While every business needs general liability insurance, business owners don’t always need the same additional lines of coverage. The specifics of your business, the nature of you operation, your assets, tools and equipment, vehicles, customer data, and employees are important factors to consider when determining what insurance is needed for a business.
A good insurance agent that specializes in Technology Insurance can help owners navigate through the various coverage options available.
Professional liability insurance is the most important line of coverage for many business professionals such as doctors, lawyers, and financial consultants. However, contractors, restaurants, and retail shops don’t need professional liability coverage.
Technology Companies may need additional coverage like Cyber Security Coverage to deal with the up front costs of dealing with a data breech and Information Security and Privacy Insurance to deal with the liability for damages your business may face resulting after a data breach.
Claims Made Liability Insurance is a Professional Liability Insurance Policy where your business is protected only for claims that are reported during the coverage period. If the claim is made during that time period than it is covered regardless of whether the same policy was in place when the occurrence happened. This is common in the legal profession because many times a claim is found months or even years after the occurrence.
Occurrence Liability is a Professional Liability Insurance Policy which covers claims that arise out of damage or injury that took place during the policy period. This is covered regardless of when claims are made. Coverage is determined based on when the occurrence happened regardless of when the claim is placed. If an occurrence happened three years ago and now the insured is with another insurance provider than the claim is covered by the insurance provider the insured had when the occurrence took place.
Technology Insurance is not something only for high-tech industries and it does not deal only with data breaches. Nearly every business has some sort of presence on computers and the internet. Nearly all businesses store some type of information about their customers. Every breach, no matter the size of your business, could have enormous repercussions.
Some industries that might need technology specific insurance could be:
- IT Professionals
- Graphic Designers
- Alternative Energy Companies
- Telecommunications Companies
- Engineers and Architects
- Web Developers
A type of liability coverage designed to protect traditional professionals (e.g., accountants, attorneys, real estate brokers, consultants, etc.) against liability incurred as a result of errors and omissions in performing their professional services. It is commonly referred to as Errors and Omissions Insurance or Medical Malpractice.
Professionals are held to a high level of scrutiny . They are expected to be highly trained and highly knowledgeable in their field. When errors occur they are typically very costly. Most of these specialized professions have risks that are not covered by a more general liability insurance policy. Professional Liability Coverage sometimes provides for the defense costs, including when legal action turns out to be groundless.
Professional liability insurance is required by law in some areas for certain kinds of professional practice (especially medical and legal), and is sometimes required under contract by other businesses that are the beneficiaries of the advice or service.
Technology E&O Insurance is a form of liability insurance that helps protect businesses providing all types of technology services and products. This coverage prevents businesses from bearing the full cost of defending against a negligence claim made by a client, and damages awarded in a civil lawsuit. These suits are usually not related to a data breach.
Most people think of E&O as medical malpractice insurance, strictly required by doctors and other medical professionals. However, there are dozens of professions in the technology sector who also need E&O coverage including:
- IT Consultants
- Marketing Agencies
- Graphic Design Firms
- Computer Programmers
- Software Developers
- Web Hosting Businesses
Everyone makes mistakes from time to time. But when a technology business or professional makes a mistake that causes financial harm, someone has to step in and defend your business or help pay to make your customer financially whole again. This is precisely the value proposition with Technology Errors and Omissions Insurance.
Cyber and Privacy Insurance is a type of a type of insurance designed to cover the insured’s liability for damages resulting from a data breach.
More specifically, the policies are intended to cover a variety of both liability and property losses. These losses may result when a business engages in various electronic activities like selling products on the Internet or collecting data within its internal network. The Cyber and Privacy Insurance Policies typically cover a variety of expenses associated with data breaches including: notification costs, credit monitoring, costs to defend claims by state regulators, fines and penalties, and loss resulting from identity theft.
The main difference between this type of coverage and Privacy Notification and Crisis Management Expense Coverage, is that this covers litigation. Privacy Notification and Crisis Management Expense Coverage typically deals only with notifying customers and restoring your public image.
This type of coverage deals specifically with the immediate response costs associated with a data breach. This doe snot deal with the liability you face dealing with the results of the breech. In many cases it is required by law to find out how the breech occurred, notify those affected and provide credit monitoring services for one year.
Cyber Extortion Coverage typically covers the costs associated with a cyberextortion event. An example of a cyber extortion event would be: an employee receives an e-mail stating that the extortionist will introduce a virus into the insured company’s website unless the company pays a $10 million ransom.
The costs covered by this insuring agreement include
(1) monies paid to meet extortion demands.
(2) the cost of hiring computer security experts to prevent future attempts.
(3) the expenses charged by professionals to deal/negotiate with cyberextortionists.
According to the Ponemon Institute, a leading independent research group, the average costs to a business for each compromised record is $188. For just 100 customers information stolen that totals more than $18,000.00. For 10,000 customers that total would be almost $2 million. Would your business survive if this were to happen to you?
Read below to see some scenarios where your company might be at risk:
- An employee’s car is broken into and a laptop containing clients’ personal information is stolen.
- An email containing sensitive employee or customer information is sent to the wrong person.
- Important customer paperwork, such as a credit application, is taken during a break-in.
- Damage to data stored in the insured’s computer systems belonging to a third party.
- Transmission of malicious code or denial of service to a third party’s computer system.
- Failure to timely disclose a data breach.
If any of these scenarios could happen to your business, you are at risk.