Errors & Omissions

What Is Professional Liability Insurance?

And why it’s important

A professional is someone whose vocation or occupation requires special training and skill. Historically, lawyers, accountants, architects, engineers, and medical professionals were the sole occupations that fell into this category as their industries established strict regulation requirements and codes of conduct. In order to practice in these fields, it was necessary to undergo formal training and pass a state licensing exam to be provided with credentials. The first Professional Liability Insurance policies, also known as Errors and Omissions coverage, were devoted exclusively to this elite group.

Gradually, other types of professionals requiring Professional Liability Insurance (Errors and Omissions Insurance) such as real estate agents, business consultants, social services counselors, educators, and computer technology professionals, began to emerge. While these other classes are often referred to as quasi-professionals under the eyes of the law, they have already developed their own industry regulations for education, testing, and accreditation.

Protection for current classes of professionals

Miscellaneous Professional Liability insurance  policies have been developed to address many of the litigation concerns of these new classes of professionals, including computer information technology professionals.

Professional Liability  insurance provides protection against certain types of lawsuits arising out of negligent acts, errors, or omissions committed during business activities and that result primarily in economic damages that are not related to bodily injury, property damage, personal injury, or advertising injury.

Why Professional Liability insurance is important

It is important to understand that a Professional Liability insurance policy is meant to dovetail with a General Liability policy. The General Liability policy covers lawsuits alleging bodily injury, property damage, personal injury, and advertising injury. As a result, these types of injuries are not covered by a Professional Liability insurance policy.

Professional Liability insurance is important because it fills a glaring gap in the General Liability policy, which has a professional services exclusion that takes away coverage for lawsuits resulting from services rendered or failure to render professional services. Professional Liability insurance policies are meant to respond to lawsuits alleging only economic damages where the client has lost money as a result of a negligent act, error, or omission in the performance of the professional services.The definition of Errors and Omissions insurance can vary per policy form.

A good Professional Liability insurance policy is necessary to safeguard the assets of any company that provides professional services.

 

5.00 avg. rating (87% score) - 1 vote
Categories: Errors & Ommissions, Professional Liability, Reports, Tech Articles and Information, Technology

Learn How Scammers Get Your Social Security Number

Knowing their secrets can help you trip them up

I came across an excellent article that explains how easy it is for scammers to decode your social security number.  I’ve always wondered how they did this.

Carnegie Mellon University researchers found that only two pieces of information are needed to guess SSNs. A recent study published in the Proceedings of the National Academy of Sciences implies that knowledge of your hometown and your birth date allows scammers to discover most, if not all, of the nine digits of your social security number.

For $50, your SSN can be bought from dozens of websites used by private investigators, businesses conducting credit checks, and savvy scammers who know your name, birth date, and current address. And if the scammer doesn’t have your birth place and date information, it’s easy to find.   “There are many websites and database where one can access the birth dates of thousands of people easily and cheaply,” said Alessandor Acquisti, the study’s lead researcher.

Public databases and voter registration lists include the information scammers want.  Over the years, the first three digits of the SSN designate an area number.   The fourth and fifth are a group number and the last four digits, which are more difficult to guess, are issued sequentially depending on how long the social security application took to process.

Today’s highest risk group for decoding are those born since 1988 because that is the year the Social Security Administration began to order SSNs for newborns and older children who did not already have a SSN.  The SSA now has a more arbitrarily process of assigning SSNs.

For those who use social networking websites such as Facebook and Twitter or have online accounts, here are four easy ways to help prevent potential problems:

  • Do not use your birth date or any part of your SSN as a password.
  • Do not post any personal information such as your birth date, hometown and location of your high school.
  • When posting obituaries of loved ones, exclude hometowns and other personal information, as the deceased are frequent targets.
  • Stay away from online security questions that ask for your hometown.

Source:  Sid Kirchheimer   AARPBULLETINtoday

1.00 avg. rating (47% score) - 1 vote
Categories: Crime, Identity Theft, Technology
Small business insurance

Small Business Technology Insurance

 Affordable solutions for small business owners

Insurance for Techs understands the importance of proper coverage for your business. As a leading technology insurance company, we know that small businesses are experiencing an ever-increasing capacity for work. As a result, you also have a greater likelihood for technology errors and omissions liability. When it comes to protecting your business, you need an insurance plan that meets your needs.

Insurance for Techs is a technology insurance company that responds to the changing business environment. We know how to efficiently and appropriately quote technology Errors and Omissions Liability insurance. With Insurance for Techs, you get more than technology insurance – you get a protection plan that includes essential risk management advice.

4.50 avg. rating (85% score) - 2 votes
Categories: Errors & Ommissions, Small Business, Tech Insurance, Technology

Fallout from Computer Fraud and Funds Transfer Fraud

Two huge reasons why crime insurance is needed

Computer FraudTravelers Insurance put out an excellent bulletin that describes the financial threats posed by funds transfer fraud and computer fraud, and the need for specialized Crime Insurance Coverage.  The Travelers coverage version, wrap +, includes coverage for both electronic funds transfer and computer fraud.

Eye-opening facts

  • According to a survey by Computer Security Institute, the average financial loss due to computer fraud was $289,000.  The average loss due to funds transfer fraud was $500,000.
  • Pfishing scams, Trojans, key loggers and other techniques allow hackers to gain control of online banking transactions and to circumvent normal online authentication controls.
  • Internal controls such as antivirus software, firewalls, and employee training are critical, but not enough for 100 percent protection.
  • Specialized Financial Insurance coverages should be purchased to protect against this risk.

Examples of Electronic Funds Transfer Fraud Claims

  • The bank of a victim company allegedly sent a letter explaining a new security program.  A company received an email that appeared to be from the bank explaining a new security program. An employee opened the email, allowing a Trojan virus access and read keystrokes from the company’s computer. The perpetrator then obtained banking and password information.  A fraudulent electronic wire transfer was initiated and the company lost $683,000.
  • The finance director of a company opened an attached zip file in an email that contained a virus.  The user ID and password to the company’s bank  account was obtained through code inserted by the virus.  A fraudulent electronic wire transfer totaling $147,000 was initiated by criminals from the company’s bank account to an unknown bank account in Arizona.   The immediate withdrawal was unrecoverable.
  • A payroll supervisor logged on to the payroll account for the company and noted that three payments totaling $704,632 had been wired from the account. The transactions were reported to the bank as unauthorized and the account was shut down.  Unfortunately, $238,781 of the loss was not recovered.

Examples of Computer Fraud Claims

  • An employee of a customer  hacked into a company’s website and changed the bank routing and account numbers to her own.  When the company paid her employer for services rendered, she fraudulently received the funds in her account.
  • A former employee used his supervisor’s password to enter the insured’s unlocked building and gained access to use the supervisor’s computer.  Using the bank routing number, he activated transactions to receive fake reimbursements allegedly made to the company’s customers.

Source: Travelers Bond & Financial Products, Bulletin, 11-09

2.00 avg. rating (51% score) - 2 votes
Categories: Breach Of Security, Crime, Risk Management, Technology

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.

3.00 avg. rating (67% score) - 1 vote
Categories: General Liability, Professional Liability, Technology
Insurance Application APproval Tips

Tech Insurance: 6 Tips to Get Your Application Approved

Up to 25 percent of all Professional Liability and General Liability insurance applications are declined by the underwriters.

One reason can be that the technology company engages in a type of work that is an unacceptable risk to the underwriters. More often than not, the tech company shoots itself in the foot during the application process by not understanding the intent behind the questions or not carefully explaining the company’s actual risk characteristics.

Here we offer 6 tips that can boost your chances of getting your Professional Liability  and General Liability insurance application approved the right way without jeopardizing your coverage at the time of a claim.

  1. BE TRUTHFUL: You must truthfully answer all questions on the applications and disclose important information. If you lie or don’t tell the whole truth on your application, you are setting yourself up for a claim denial should you be involved in a lawsuit. Upon notification of a claim, the claims adjuster may review your original application for material misrepresentations. A material misrepresentation is any statement that if  answered correctly would have been reason for the carrier to have denied the application.. A material misrepresentation will likely result in your claim being denied. The end result is that you will forfeit insurance-provided legal defense and any payments for settlement or adverse jury verdict.
  2. PROVIDE A DETAILED DESCRIPTION OF YOUR OPERATIONS: Writing one or two sentence description on the application won’t cut it. because it will appear like you are trying to hide something about your services. This raises underwriter suspicions and will result in either a refusal to consider your application or a string of additional questions that slows down the underwriting process.
  3. Tech Insurance ApplicationREPRESENT YOUR OPERATIONS ACCURATELY: Many insurance carriers that write Professional Liability (or Errors & Omissions) insurance for tech professionals will limit coverage for the types of work that are disclosed on the application. You may think that you are being clever by only checking some of the types of work that you perform, but you’re actually limiting the scope of your own coverage.
  4. DON’T LIST WORK YOU HAVE NO PLANS TO PERFORM: Many applicants shoot themselves in the foot by listing a type of work that they can perform but have no intention of performing. Only list the types of work  you have been performing or know that you will perform within the next 12 months. If you have already signed a contract to perform a particular type of work or are under contract negotiations to perform a particular type of work, it should be disclosed on the application.
  5. DON’T CONTRADICT INFORMATION THAT’S ON YOUR WEBSITE: Many tech professionals list broad categories of work that they can perform on their website to make themselves look more professional to their prospects. Please understand that all insurance company underwriters will do a Google search of your company name and thoroughly review your website. Any contradictory information, such as advertising work you don’t actually perform, will raise a red flag that will either result in rejection of your application or in additional questions that will slow down the underwriting process.
  6. GIVE A DETAILED DESCRIPTION OF ANY HIGH RISK TYPES OF WORK: Offering this information up front may mitigate their impact. Below is a short list of high-risk end uses for your technology products and services that can result in rejection of your Professional Liability or General Liability application, depending upon your level of involvement.
    • Financial transaction software
    • Medical diagnostic hardware/software
    • Manufacturing software (robotics, PLC, CAM)
    • Computer aided design
    • Safety or alarm equipment
    • Utility and natural resource process (oil and gas, power, nuclear, etc.)

If you are involved in any high risk areas, it would be helpful to explain your involvement in detail on your application and to list reasons why your risk would be less than the average risk in such high risk areas. For example, if you subcontract out work in these high risk areas to another tech professional who carries both Professional Liability and General Liability, this should be mentioned.

We’ll be happy to answer any further questions you have, or provide you with a quote. Just call us at 800-622-7370.

4.00 avg. rating (77% score) - 1 vote
Categories: Reports, Technology