Tech Professional Liability Insurance (Tech Errors & Omissions Liability)

Professional Liability insurance (AKA Errors & Omissions Liability insurance) is perhaps the most important policy for the average IT company.

The Tech Professional Liability policy protects against certain allegations of negligent or wrongful acts, errors, or omissions or failure of your technology services to perform as intended.

Examples of potentially covered claims include:

• A problem with software the results in a client losing account receivable records and related inability to collect what is owed.
• Hardware failure that results in inability for client to accept online e commerce orders for two days.
• Custom code does not operate as quickly as promised.
• Client's system is hacked resulting in release of confidential information.

To follow is a brief summary of the basic coverage form for one of the leading insurance carriers for Tech Professional Liability (Errors & Omissions):

Policy pays on your behalf sums owed in excess of any retention you are legally obligated to pay as damages or claim expenses because of a "glitch" in your performance of "technology services". The coverage territory is worldwide.

"Glitch" means the following whether actually or allegedly committed by you:

• Negligent act, error, or omission
• Failure of your "technology services" to perform the function or serve the purpose intended
• Breach of warranties or representations bout the fitness quality, suitability, performance or use of your "technology services", (important enhancement: policy does not have contractual liability exclusion) and
• Failure to prevent denial or service; disruption of service; unauthorized access to, unauthorized use of, tampering with or introduction of malicious code into firmware, data, software, systems or networks; and identify theft or disclosure of "non public personal information" stored in an electronic format that results in wrongful or fraudulent use of such information.

"Technology Services" means the following services performed for others:

• Consulting, analysis, design, installation, training, maintenance, support and repair of or on software, wireless appliances, firmware, shareware, networks, systems, hardware, devices or components.
• Integration of systems
• Processing of, management of, mining or warehousing of data
• Administration, management, operation or hosting of another party’s systems, technology or computer facilities
• Website development; website hosting
• Internet access services; intranet, extranet or electronic information connectivity services; software application connectivity services
• Manufacture, sale, licensing, distribution, or marketing of software, wireless application, firmware, shareware, networks, systems, hardware, devices or components
• Design and development of code, software or programming
• Providing software application: services, rental or leasing
• Screening, selection, recruitment or placement of candidates for temporary or permanent employment by others as information technology professionals
• Telecommunications services
• Telecommunications products

Covered Entities / Persons:

• Any "named insured"
• Past or present partner, executive officer, or similar position of "named insured" while performing their duties
• Past or present employee of "named insured" while performing their duties (does not include "temporary worker")
• Individual person who is agent or independent contractor but only while acting within scope of "contract worker agreement" with the "named insured"
• Client that the "named insured" is required in a written contract to perform "technology services" to add as an additional insured but only if the "glitches" were committed by "named insured" in the "named insured’s" performance of technology services, the contract is entered into before the "glitch", and there are no allegations of independent misconduct by the client
• Member or stockholder of "named insured"

Notable Exclusions from coverage: "bodily injury", "property damage", and "personal injury" (requires General Liability policy but some exclude "personal injury" for certain classes of work); gradual deterioration or wear and tear of tangible property; disruption of, surge in, fluctuation in or loss of: power, connectivity or communications; delay in failure to complete "technology services", cost: overruns, guarantees, estimates or estimates being exceeded; violations or misuse of any intellectual property right, including but not limited to infringement of title, slogan, trademark, trade name, trade dress, service mark, service name, copyright, patent, trade secrets; plagiarism or misappropriation of ideas (requires Intellectual Property Infringement policy); refusal to employ; wrongful termination; employment related practices (requires Employment Practices Liability policy); breach of fiduciary duty and ERISA violations (requires Fiduciary Liability policy); pollution; electromagnetic radiation; asbestos; dishonest, fraudulent, criminal, or intentional wrongful acts; and material defects or bugs known by any insureds that could reasonably be expected to cause harm.

The basic policy form can be upgraded to a more advanced policy form to add the following coverages if requested and for additional premium charge:

• Infringement of copyright, title, slogan, trademark, trade name, trade dress, service mark or service name
• Plagiarism or misappropriation of ideas
• Misuse of intellectual property right in content
• Libel, slander, product or service disparagement, trade libel, infliction of emotional distress, outrage, or outrageous conduct
• False light public disclosure of private facts, intrusion and commercial appropriation of name or likeness
• Wrongful entry or eviction, trespass, eavesdropping or other invasion of the right of private occupancy
• Malicious prosecution or false: arrest, detention or imprisonment

Note: The Policy Language Above Has Been Paraphrased And Is For Illustrative Purposes Only. You Must Refer To The Actual Policy Form For A Complete Description Of All Coverages, Definitions, Conditions, And Exclusions.