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Technology Errors and Omissions (Tech E&O) provides protection for the professional services provided by technology companies. Cyber Liability refers most often to a breach in private records held by a company. Where the two coverages intersect is when a cyber liability event happens resulting in stolen customer records, and the breach may be attributed to the failure of the technology company in providing adequate professional services.
In our office we buy Cyber Liability insurance in case hackers from a foreign government, crime organization or a high school student next door break into our server and steals our customers' private information. Cyber Liability coverage will provide notification, life lock type security for all customers affected, and third party coverage in case the break results in actual losses to our customers. The insurance also includes forensic investigation that strives to determine how the data was hacked. This bit is critical if, for instance, the investigation reveals that our IT partner left a vulnerability in our firewall and it was that vulnerability that allowed the breach. Then it is the IT partner's Tech E&O coverage that is looked to for claim payments. Errors and Omissions insurance (E&O) provides protection to professionals inclusive of doctors, lawyers, insurance agents, consultants and IT providers.
An intersection occurs when a tech company provides co-location services, or services such as Platform as a Service (PaaS), where they not only maintain the security aspect but actually hold the information that is stolen. Professional Errors and Omission insurance must always be reviewed carefully for specific exclusions. Be on the lookout particularly for exclusions for unauthorized access, mechanical or electrical failure, delay in delivery, or deliberate acts by rogue employees. What this protects against is the unknown Edward Snowden working in his cubicle causing tremendous damage to a company. If an executive officer of the company creates similar acts, including intentional acts, no insurance policy will protect against that.
Some professional liability policies provide limited coverage where only specific services defined in the policy are insured against. Underwriters always prefer to know exactly what kind of services are provided in order to quantify the cost of professional liability insurance. Because the functions performed by most tech companies are varied and evolve with available technology, we prefer enterprise coverage when it is available. Enterprise coverage means that all professional activities are protected, even those that the underwriter never even knew about because they are new or because they are one-offs.
A type of liability that has been dormant over the past 20 to 30 years has been fully resurrected with the advent of the internet, and that is advertising liability. Today this can include what is known as media liability. When ads were primarily in print form, or on the radio or television, the publisher would often vet the content in pre-production so that aggressive companies could not spread lies about their competition and get the host source in trouble. With websites there is no such third-party protection; companies often just put up online whatever they feel like. Web hosting sites and web development service companies are the new TV and radio platform. While they may indeed have terms of service that limit liability regarding specific comments or statements, they are immune from advertising liability claims.
To discuss your own liability exposures, call the Gordon Atlantic Insurance professionals toll free at 1-800-649-3252. Prefer to type versus talk? Click below!
