What does technology liability insurance cover?
Technology liability insurance covers multiple errors and omissions-related incidents that can occur within a technology company. These can include:
- Technology product or service failures
- Contractual disagreements
- Professional negligence
- Third-party cyber liability
- Media and content liability
Technology product or service failure
If your product or service does not perform as advertised and causes financial harm to a customer, they can file a technology liability claim against your company.
At the start of most commercial relationships, the associated groups sign a contract that outlines features, capabilities, services, and other deliverability items. If these terms are not upheld because your company is unable to do so or there is an oversight, it may cause financial loss for the customer. If they sue, a technology liability insurance policy can help cover lawsuit expenses.
The products and services your company sells have the potential to cause financial or legal issues for your customers. Software updates, incompetent service advice, hardware malfunctions, or other technology-related issues can cause problems for customers. For example, if your software releases a patch that introduces a vulnerability to a client’s database, they could sue for negligence.
Third-party cyber liability
If your technology causes or is responsible for a cybersecurity breach on a client’s system, they could file a claim against your business. In this case, a technology liability insurance policy may help cover the expenses from a lawsuit. If a data breach or cyberattack happens to your business, you will need a cyber liability insurance policy to cover those expenses.
Media and content liability
If you provide a client with digital media or content services that result in copyright infringement, a technology liability insurance policy may cover legal expenses. Depending on the situation, a general liability insurance policy may be required to cover lawsuit expenses. Discuss your specific needs with a licensed insurance agent.
What does technology liability insurance NOT cover?
As with any insurance policy, there are exclusions to what technology liability insurance will and will not cover. Other situations a technology liability insurance policy will not cover are:
A business that is involved with illegal activity will not be able to find coverage for lawsuits resulting from their actions.
Slander and libel
Slander and libel are covered under different insurance policies, depending on the context. If someone who is part of your organization makes accusations against another employee, a resulting lawsuit would be covered by an employment practices liability insurance policy. If these same accusations are made against a third party, like a customer or competitor, your business would need coverage through a general liability insurance policy.
Customer property damage or injury
A business will require a general liability insurance policy to cover property damage or injuries to customers.
If a business or their clients have damages due to a cybersecurity breach, a technology liability insurance policy will not cover expenses. The company will need a cyber liability insurance policy to take help with cyber-attack expenses.
Technology companies will often have to secure a surety bond when competing for large government or private sector contracts. A technology liability insurance policy cannot take the place of a legal or contractual bond requirement. Some common bonds required by technology companies are fidelity bonds, licensing & permitting bonds, and service bonds.