What’s the difference between Technology Professional Liability & Cyber Liability Coverage?

Technology Professional Liability is for those companies that produce software and sell it to companies or they provide a service to companies to manage their information technology systems. Cyber Liability coverage is for all other companies that have a database program or a company website.

What does Technology Errors & Ommisions cover?

Tech E&O protects your business when one or your clients suffers a monetary loss due to your product or service not performing as expected, including the event of an error or omission committed by your technology firm. These policies also cover defence costs in the event of lawsuits. Tech E&O coverage would apply in the following situations:

  • A programming error was made in the code of a website or program your company produced, but isn’t found before it is up and running. Your client depends on this product or service to operate its business. When the software doesn’t work and it shuts down your clients business causing a loss of income due to the programming error, when they sue your firm, you get coverage.

  • A part your company makes is installed in a piece of production machinery. Four weeks after it’s installed, the component fails to work any more, causing the equipment to fail to work, but otherwise not damaging anything or hurting anyone. The customer that relies on this equipment for its business that you installed, has to shut down completely losing $50,000.

  • Your key employee strongly suggests that a client make a change to its network. The client follows the recommendation and its network crashes as a result, causing a loss of business and opportunity as a result of the network stoppage.

  • In all of these cases, Commercial General Liability coverage would not cover a claim or any costs of litigation because of the presence of an error and the lack of resulting physical damage to the third party’s property. It should be noted that Tech E&O policies usually exclude product recall, but some will accept damages for loss of use of a failed product. They also generally exclude non-financial losses and intentional or dishonest acts. Contact AVID Insurance & Risk Management Inc. today to learn more about protecting yourself with a comprehensive professional liability policy.

Cyber Liability Insurance

Imagine that one of your employees has had his laptop stolen and a cyber thief was able to access the private banking information of thousands of your customers. Or if your network was hacked, your company would have a duty to advise your customers of the date breach costing your company thousand to millions of dollars because of a data breach.

Why Cyber Liability Insurance?

Possible exposures covered by a typical cyber liability policy may include:

  • Intellectual property rights – If another company alleges that your company has stolen intellectual material from another company on its’ website, or that one of your employees has libelled another company on social media, then a cyber liability policy would indemnify your company.
  • Damages to a third-party system – If an email sent from your server has a virus that crashes the system of a customer, or the software your company distributes fails, resulting in a loss for a third party, you could be held liable for the damages.

  • System Failure – A natural disaster, malicious activity or fire could all cause physical damages that could result in data or code loss. While the physical damages to your system hardware would be covered under your existing business liability policy, data or code loss due to the incident would generally not be covered.

  • Cyber Extortion – Hackers can hijack websites, networks and stored data, denying access to you or your customers. They often demand money to restore your systems to working order. This can cause a temporary loss of revenue and generate costs associated with paying the hacker’s demands, or rebuilding if damage is done.

  • Business Interruption – If your primary business operations require the use of computer systems, a disaster that cripples your ability to transmit data could cause you, or a third party that depends on your services, to lose potential revenue. From a server failure to a data breach, such an incident can affect your everyday operations. Time and resources that normally would have gone elsewhere will need to be directed towards the problem, which could result in further losses. This is especially important as denial of service attacks by hackers have been on the rise. Such attacks block access to certain websites by either rerouting traffic to a different site or overloading an organization’s server.

Cyber Liability Insurance is specifically designed to address the risks that come with using modern technology—risks that other types of business liability coverage simply won’t cover. The level of coverage your business needs is based on your individual operations and can vary depending on your range of exposure. It is important to work with a broker who can identify your areas of risk so a policy can be tailored to fit your situation.

AVID Insurance & Risk Management can help protect your company from cyber liability risks.

As reliance on technology continues to increase, new exposures continue to emerge. As your business grows, make sure your cyber liability coverage grows with it. AVID Insurance & Risk Management is here to help you analyze your needs and make the right coverage decisions to protect your operations from unnecessary risk.

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