The depth and scope of the roles of information technology (IT) specialists have grown exponentially from the days when the office’s ‘IT guy’ was a put-upon loner who magically showed up to reboot the system.
Information technology is a crucial cog in the business machine, and the reliance on IT continues to increase. With the growth, comes an increase in the potential for liability. Additionally, due to the international nature of IT, there is a greater chance for litigation from domestic and foreign origins.
Because of the risks and the continued need for IT, an information technology liability policy could be valuable to your business.
What Is Information Technology Liability Insurance Cover?
IT liability insurance exists to give those in the information technology sector seamless cover. Because of the fast-paced and variable nature of the IT profession, gaps exist when an IT person or company carry separate policies for professional indemnity and public liability cover.
Why Do Gaps Exist in the Cover?
A common issue for IT professionals and contractors is the definition of their work. Does an IT pro offer a service or a product? Is the claim covered under professional indemnity or public liability insurance? These questions are often the subject of debate when litigation is a part of the picture. Unfortunately, many in the industry have lost out because of the wrong kind of insurance cover.
To close the gaps and offer coverage that is not dependent on the interpretation of your work in the IT sector, this insurance in a blending of both types of insurance cover.
What Will the Professional Indemnity Features of a Policy Cover?
When breaking down the two components of an IT liability policy, remember that these are a single policy intended to simplify IT professional’s cover. The occurrences that would generally fall under cover of a professional indemnity policy include but are not limited to:
- Loss of documents including electronic data
- Unintentional infringement of circuit layout rights as specified under the definition of intellectual property
- Civil liabilities incurred during the providing of IT services
- Privacy breach
- Implied warranties
- Hold harmless agreements
- Product recall costs
- Contractors covered
- Fee mitigation
What Specifics Have Cover Under the Public Liability Facet of It Liability Insurance?
The specific events that could customarily fall under public liability cover include:
- Advertising liability
- Personal injury
- Property damage including the loss of use of property
- Personal injury or property damage caused by an unknown defect
- Principals with whom you have entered into a contract for work
- Contractors with whom you have entered into a contract for work
Who Needs to Consider It Liability Insurance?
An information technology liability insurance policy can benefit those in numerous areas of the industry. This includes but is not limited to:
- App developers
- CCTV supply, service, and installation
- Data storage or processing
- Hosting services
- IT consultants
- IT hardware manufacturers
- IT hardware and software resellers
- IT help desk and support services
- IT placement and recruitment services
- Online graphic designers
- Security system installation and service workers
- Software development personnel
- Systems integration services
- Value-added resellers
- Website designers and developers
The IT profession is a large and diverse industry which necessitates insurance cover built to encompass the many facets of the information technology world.
Are There Any Other Types of Insurance That It Professionals Should Consider?
Depending on the specifics of your work, you could consider business insurance or cyber insurance.
You might benefit from business insurance if:
- You own the office where you work
- Your commercial lease requires that you have cover for the building contents or glass
- You rely on computers to do your work
- You hold stock
You might consider cyber insurance if:
- You hold sensitive employee information
- You are responsible for maintaining client information
- You have a plan for hacking, data breaches, or a ransomware attack
Case Studies
The following case studies will illustrate the importance of information technology cover and circumstances that can lead to expensive litigation that could cost you the reputation you built as well as your livelihood.
- Jared’s software development company receives the contract to design and implement a program that will automate the client’s business activities. The program tested perfectly and all of the client’s business information and records transferred to the new system. Two weeks later, the system crashed, and the back-up program failed. As a result, the client lost all of their information and sued Jared’s company. IT liability insurance took care of the issue, enabling Jared to keep his company.
- Hope’s IT hardware supply company installed communications equipment in a client’s office. An internal short-circuit in the equipment led to a fire which caused $500,000 worth of damages. The client’s insurer sued Hope’s company for the damages. Without IT liability cover, she would have lost everything.
- Information technology liability cover helped Damon’s database management software company in a suit concerning copyright infringement. Damon’s company was accused of distributing a program created by its former employee who stole the program’s source code. The IT cover helped Damon with the costs associated with the lawsuit.
As the business world is increasingly dependent upon information technology and therefore IT professionals, it is essential to be sure you have the right kind and amount of cover. An insurance expert from Grace Insurance can work with you to cover all of your IT liability insurance needs.
The material presented in this blog post is for informational use only. It should not and cannot replace an individual consultation with an insurance expert and does not constitute legally binding insurance advice. Always speak with an insurance expert for guidance that is centred on your needs.
