Technology has made our work easier and faster, but expecting it to work seamlessly forever is delusional. There are always chances of technical glitches or other errors, and you can never be safe enough.
Any error or glitch in technology can disrupt essential activities of the organization and leave your clients displeased with your product or service. Therefore you need Information Technology Liability Insurance to safeguard your business. The insurance cover will secure IT Professionals or Contractors when the IT service or product offered to the client fails.
Here is a brief guide on what IT liability insurance covers and how it can help your business.
What is Information Technology Liability Insurance?
IT Liability Insurance is a specifically designed insurance policy for IT Professionals and contractors. It offers protection against third-party liability or claims due to failure or errors in IT products, advice, or services delivered to clients.
Unlike other cyber coverage, this IT professional insurance provides seamless package liability coverage to tackle the diverse and complex market of the IT sector. This tailored policy offers protection of both Professional Indemnity Insurance and Public & Products Liability Insurance.
So you can buy a single insurance policy and avoid the gaps between the different policy covers because of claims against a diverse range of IT products or services.
What comes under IT Liability Insurance?
Since IT companies offer a combination of advice, products, and services, they need insurance security that can cover claims against different types of liability. An Information Technology Liability Insurance consists of the following:
Professional Indemnity Insurance
Professional Indemnity Insurance protects IT Professionals, consultants, and their organizations from claims against them for potential losses. These losses can arise due to actual or alleged errors and omissions in the services or advice offered.
The policy provides security by offering compensation against third-party claims and the defence expenses incurred during defending or investigating the claim. It includes legal costs, court costs, and more.
Public and Products Liability Insurance
- Public Liability Insurance
Running a business requires ensuring the safety of clients, suppliers, and business property. An IT liability insurance policy covers the protection of Public Liability Insurance. It will help you by securing you and your business when the customer or supplier gets injured or when the property faces damage due to any errors in business activities.
- Products Liability Insurance
Product Liability Insurance offers protection against claims by clients for any property damage or personal injury caused by the product provided by you or your business.
What does it cover?
Information Technology Liability Insurance covers claims that come under both – professional indemnity and public & product liability insurance. IT Professional Insurance includes coverage against:
- Civil liability emerging due to the failure of IT services or products
- Wrong or misleading advice, infringement of copyright, including registered design, trademark, or plagiarism
- Loss of data or documents
- Libel, Slander, or defamation
- Personal injury because of your company’s negligence
- Property damage, such as fire damage due to faulty communications equipment provided by you or your company
- Defence costs, including legal, court, or experts fees
- Breach of confidentiality, such as crucial clauses
- Disruptive behaviour of employees or subcontractors
- General liability arising out of dishonest acts
- Fall of your business premises
- Penalties or fines claim by the third party
- Violation of Intellectual Property Rights, including clients, customers, or thirty parties such as competitors
- Errors or omissions leading to economic losses
- Product Recall
Who requires it?
IT Liability Insurance covers a wide range of occupations that manufacture, develop, integrate, sell or license any IT-related product or service. IT professionals from the below-mentioned professions may need Information Technology Liability insurance.
- Website designing, hosting, or plug-in building
- Information Technology service provides
- Software developers
- IT Consultants
- Hardware developers and installers
- IT Maintenance, support, and repair technicians
- Cybersecurity and management
- Data warehousing and hosting service providers
- Telecommunication providers
- Software/Hardware Resellers
- Training and Education
- IT Placement and Recruitment Services
Example of how IT Liability Insurance works
Let’s use an example to understand how this type of policy works.
Example:
An IT company that was contracted to transfer data of a manufacturing company from one server to another service. During the data backup and transfer process, the IT company’s consultant deleted some of the files accidentally. Due to data loss, the manufacturing company filed a reimbursement claim. Under the IT company’s policy, they were given an indemnity of $11,000.
Conclusion
We hope you have a clear idea of why IT companies and professionals need insurance cover for their professional services. The next step is to consult with professional insurance companies offering IT liability insurance and buy a suitable one.
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