Tech Professional Services Not Covered by General Liability

But exclusions can be overcome

Tech companies and IT professionals need General Liability to provide coverage for negligence claims or lawsuits alleging bodily injury, property damage, personal injury, and advertising injury.

Many General Liability policy forms have an exclusion which takes away coverage for a laundry list of professional services including legal, accounting, architectural, engineering, medical, health care and computer consulting, design, or programming services including web site design. 

Obviously, this presents a problem for tech companies or IT professionals seeking General Liability coverage. But the problem can be solved by an insurance professional who specializes in insuring tech and IT risks. Carriers like The Hartford can eliminate this harmful Professional Services exclusion by endorsing the policy to add back coverage for tech professional services. Hartford has a special “Technology Services Coverage” endorsement for this purpose.

Tech professionals with General Liability carriers that don’t address the Professional Services Exclusion with a buyback endorsement can find needed coverage under a Professional Liability policy that offers a Contingent Bodily Injury/Property Damage endorsement.

Be sure to avoid these types of problems by dealing with a tech insurance specialist. If you have questions or would like help determining your insurance needs, contact us at 800-622-7370.

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Categories: General Liability, Professional Liability, Technology

Loss of Electronic Data

It’s not covered under a General Liability policy

Standard business General Liability policies don’t adequately cover the liability risk of property damage to electronic data.

Service or contracting businesses can cause property damage resulting in loss of or damage to a third party’s digital data that is housed on their computer system. This exposure is not limited to IT firms.

Understanding the terminology

The term property damage used on standard General Liability forms is defined as

  • physical injury to tangible property including loss of use thereof; and
  • loss of use of tangible property that is not injured.

According to these definitions, electronic data is not tangible property.

Electronic data is information, facts, or programs stored as or on, created or used on, or transmitted to or from computer software, hard discs, CD-ROMS, tapes, drives, cells, data processing devices, or any other media used with electronically controlled equipment.

What you can do

This problem can be resolved by the addition of various endorsements to cover property damage to electronic data. The cost is usually minimal.

However, some General Liability carriers that cater to IT firms will not add the endorsements. As a result, IT firms may need to verify that their Professional Liability (Errors & Omissions Liability) policy will cover this exposure. The key is to locate the definition of “tangible property” and find out if electronic data is included.

 

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Categories: General Liability, Professional Liability, Technology

Social Media Risk Exposures

An attorney weighs in on the risks involved

Social Media exposureThe Internet and social media are having an increasingly effect on businesses, which also can cause substantial loss exposures, according to Daniel Maldonado, an attorney with Kunz Plitt Hyland & Demlong.

Social Media Liability can be defined as a liability exposure arising out of social media or networking sites such as Facebook, Twitter, YouTube, and LinkedIn. The risks involved in using these social media sites include possible insurance claims filed for libel, slander, privacy invasion, intellectual property infringement, and harassment.

What risks does your policy cover?

The majority of commercial insurance policies include personal and advertising injury that offers general coverage for libel, slander, insulting remarks as well as invasion of privacy. Some Homeowner policies also can provide protection of personal and advertising injury. A number of carriers may provide coverage for personal and advertising injury on renters policies. The 2001 ISO Form, defined advertisement  in part as “material placed on the Internet or on similar electronic means of communications.” This ISO Form also added Exclusion K, which excludes coverage for personal and advertising injury arising out of chat rooms and electronic bulletin boards.

A businesses’ networking-related exposures usually correlate with the business activities. For example, a business manager or supervisor may broadcast information regarding termination of an employee or reveal personal information. Personal networking exposures can extend to criminal accusations, infidelity, disclosure of financial records, failure to disburse child support payments, or posting inappropriate images or videos.

How far the risks can reach

Sometimes insurance claims involve older posts, which can affect the cost of defense; the costs of electronic discovery can include subpoenaing data or information from the social networking site. In addition, depending on the nature of the claim, the insured may be faced with several lawsuits in numerous jurisdictions including countries outside of the U.S. Social media allows for effortless  libel, slander, and privacy invasions when derogatory comments can be broadcast globally rather than  in the privacy of a person’s home. As a result, the damage of an insurance claim will be more significant due to the number of people it reaches.

It is suggested that if a client utilizes social media or networking sites, offering optional personal injury protection for the homeowner or rental policy would be beneficial, as well as businesses obtaining a Commercial General Liability policy, which typically includes personal injury coverage as well.

Source: “Rough Notes;” Bruce Hicks; June 2012

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Categories: General Liability, Risk Management, Tech Insurance

What Policy Covers Stolen Client Property In Your Possession?

Property insurance is coverage most businesses should carry

How often do you have your client’s personal property in your office or in your car?  Did you know that property damage to personal property of others in your care, custody, or control is not covered under a standard General Liability policy?  The Property insuranceexclusion under the General Liability policy reads:

Exclusion J. Damage to Property:  “Property Damage” to (4) Personal Property in the care, custody or control of the insured.

For example, your client gives you a laptop and requests repairs.  You take the laptop with you as you head to another client’s location.  While you are there, someone breaks into your car and steals your client’s laptop.  Your General Liability policy would not cover this loss. However, if you purchase a Property policy or are able to add Property coverage to your existing General Liability policy, there is a coverage that can be included called “Personal Property of Others.”  You can choose the desired limit of coverage and it must be combined with coverage for your own business personal property or building.

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Categories: General Liability

Advertising Injury Coverage Gaps Can Affect Non-Media Firms

Cyber Liability insurance is required for intellectual infringement protection

The 1986 ISO General Liability policy form provided broad coverage for advertising injury for non-media companies. However, due to recent restrictions on advertising injury coverage under a General Liability policy, many non-media companies should  Cyber Liability coverageconsider purchasing of a Media Liability (offline) or Cyber Liability (online) policy in order to close certain coverage gaps.

The 2001 ISO version of the General Liability form includes a new exclusion that eliminates coverage for “injury arising out of the infringement of copyright, patent, trademark, trade secret, or other intellectual property rights.” However, the new exclusion excepts “ infringement in your advertisement of copyright, trade dress, or slogan.” Therefore, coverage is now specifically excluded for all trademark and trade secret claims. In addition, coverage for the three remaining types of intellectual property claims (copyright, trade dress, or slogan) is dependent upon such offenses arising out of an advertisement.

Breaking the exclusion down

Within the definition of advertisement, only infringements that occur in the advertisement itself are covered. The new 2001 edition includes the following new restrictions on Internet activity:

  • Advertisement with respect to a website means only that part of the website that is about “your products, goods or services for the purposes of attracting customers or supporters.”
  • Coverage is eliminated for claims “rising out of an electronic chat room or bulletin board that the (insured) hosts, owns, or over which the (insured) exercises control.” It is likely that the use of blogs, Facebook, Twitter, and other social media fall under this exclusion.
  • Coverage is also eliminated for “unauthorized use of another’s name or product in the [insured’s] e-mail address, domain name or meta-tag, or any other similar tactics to mislead another’s potential customers.” One area of concern that has not yet been clarified by the courts is use of trademarked terms in meta-tags.

How this can affect your company

Below are some common situations where the above-mentioned restrictions can eliminate coverage for non-media companies:

  • Claims for copyright infringement arising out of text, photographs or other content that are not part of an online advertisement. The use generic photos in areas that are not actually part of a specific product advertisement on company  websites  is a common source of litigation. Providers of stock photos are using watermarking technology to search the Internet for instances of the unauthorized use of their photographs and many law firms are specializing in providing representation in this area.
  • Trade dress claims arising out the look and feel of a website, blog, social media, etc. that is not part of an online advertisement. These involve navigation (ex: buttons, bars), color schemes, hyper links, menus, etc.
  • Online comparative advertising where your product is represented as being bigger, better, faster, etc. as compared to the competition. These representations may result in claims for false or misleading advertising and unfair competition under the Lanham Act or various state statutes. However, if these representations are directed at a specific competitor, they may be covered under advertising injury.
  • Product packaging that too closely resembles a competitor’s may result in liability for trade dress infringement. These claims may be excluded because the courts may not consider the product packaging to be part of an advertisement.

If any of these instances of potential uncovered claims are a concern, a business should strongly consider adding Media Liability  or Cyber Liability policies.

Source: Elizabeth C. Kock and Jay Ward Brown, Levine Sullivan Koch & Shultz, LLP; Risk & Insurance; December 2011.

4.00 avg. rating (78% score) - 2 votes
Categories: Advertising Injury, Cyber Liability, General Liability

Computer Consultant Insurance Needs

The number of computer consultants in the job market and the need for affordable professional liability (errors and omissions liability) insurance for computer consultants has mushroomed with the technology explosion.

Computer consultants are vulnerable to the types of lawsuits that are covered by Professional Liability (Errors and Omissions Liability) insurance. The failure of their technology services and products to perform can result in lawsuits for negligence and breach of warranty. Professional liability insurance covers computer consultants commonly named in lawsuits alleging that their negligent acts, errors, and omissions have resulted in economic damages to their clients when the technology products and services fail. Computer consultants who bear these risks out of their business or personal assets face unacceptable risks. A good Professional Liability (Errors and Omissions Liability) insurance policy can provide computer consultants with peace of mind.

General Liability Insurance

In addition to Professional Liability insurance, computer consultants should also have a good General Liability Insurance policy to protect their business.

Find out how much Professional Liability (Errors and Omissions Liability) Insurance for information technology companies can cost for you.

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Categories: Errors & Ommissions, General Liability, Professional Liability, Reports, Tech Articles and Information