What is Information Technology Insurance?

IT insurance provides coverage for:

Claims for Civil Liability arising from the provision of Information Technology services, advice, specification or work

Claims for an Occurrence which causes Personal Injury or Property Damage in connection with your IT Business and/or Products

Financial damages awarded by a court or from an approved negotiated settlement

Costs and expenses of defending claims

Who is Covered?

The persons or entities insured under an IT policy is broad and includes.

The Insured named in the policy schedule

The Insured in respect of acts of agents or consultants of the Insured while undertaking work of behalf of Insured for which the Insured is liable

Any Director, Executive Officer, Employee, Partner

Any Principal for the performance of work by the Named Insured as required by any contract or agreement

Contractors of your business subject to a written contract between you and them

What are the Benefits of an Info Tech Policy?

 Professionals and companies providing Information Technology services would benefit from having a combined Info Tech policy cover in comparison to separate policies. The main reasons include

Additional cover being provided that is tailored

Having the same insurer covering both policy sections under the one packaged policy thus reducing the chance of a coverage dispute due to separate policies

Reduction in gaps in coverage

The most relevant areas of cover are compared below to the cover available under separate Liability policies.

INFORMATION TECHNOLOGY LIABILITY PACKAGE SEPARATE POLICIES
Covers:

• any service, advice, specification or work whilst conducting the Insured Professional Business Practice

• in connection with the provision by the Insured of above service, advice, specification or work, any Computer Equipment manufactured, installed, assembled, repaired, serviced, treated, sold, supplied, distributed, licensed or shared

Professional Indemnity Policy

Covers:

• acts, error or omissions arising out of the conduct of the Insured Professional Business Practice

Does Not Cover

• directly or indirectly any manufacture, installation, assembly, sale, supply or distribution of goods or products

• workmanship of the above

• supervision of workmanship of the above

Covers:

• personal injury or property damage caused by an event in connection with the Insured’s Business

• personal injury or property damage caused by an unknown defect in the Insured’s products

Does Not Cover:

• any liability arising in connection with computer virus, or the design of any computer hardware or software

Liability Policy

Covers:

• personal injury or property damage caused by an event in connection with the Insured’s Business

• personal injury or property damage caused by an unknown defect in the Insured’s products

Does Not Cover:

From any cause whatsoever, any

• total or partial destruction, distortion, erasure, corruption, alteration, misinterpretation, or misappropriation of Electronic Data and/or Software

• error in creating, amending, entering, deleting or using Electronic Data and/or Software

What Types of Claims are Covered by an Information Technology Liability Insurance Policy?

Professional Indemnity Policy Section

The cover provided are Civil Liability Claims arising in the provision of Information Technology.

This is normally defined as:

Any service, advice, specification or work provided by the Insured, including the provision of data processing, data warehousing, computer facilities management, telecommunication and data communication services whilst conducting the Insured Professional Business Practice; and

Any Computer Equipment manufactured, installed, assembled, repaired, serviced, treated, sold, supplied, distributed, licensed or shared relating to the business.

Breach of Duty

What is meant by Breach of Duty?

A mistake or failure by a professional to exercise the required level of skill that causes a financial loss

Failure by a professional to preserve the confidence of information acquired during their professional appointment, and used to the detriment of their client

Examples

Errors or Omissions arising out of mistakes that lead to

loss of data and the subsequent financial loss

unintentional infringement of copyright

Breach of Contract arising out of

inadequately meeting the customer’s requirements

not working within the agreed time-frames

additional costs associated with inadequate systems testing or detection/resolution of issues

Allegations of Negligence arising out of the failure of

uninterrupted uptime of the networks or systems, i.e. the time the system or network is continually running or operating

the adequacy of the security of the networks or systems

Claim Examples

Errors or Omissions

Professional Services Provided

Allegations of Negligence arising out of the failure of

Details

The claim relates to the Insured’s trademark name whereby it set up a business with a name that was found to be too similar to a US company’s Australian subsidiary name

Federal Court judge held that the name was deceptively similar to the other name and issued injunction restraining its continued use

This claim cost just over $100,000 in legal costs for both parties

Breach of Contract

Professional Services Provided

Computer consulting and support involving the supply and service of corporate computer needs, mostly selling third party security products

Details

Insured entered into $800,000 contract with the claimant to develop a new software program for its operations

When the program was not completed by the contracted completion date, the claimant told the insured to cease work

Non-completion was partly due to the insured’s own staffing issues but mainly because of changes in scope of the contract by the claimant

Contract is now formally terminated and a claim for damages of $450,000 alleging breach of contract and misleading pre-contractual misrepresentations on the part of the insured

A computer expert has been engaged for expert review of the Insured’s work on the project

$150,000 paid for investigation costs and negotiated settlement.

Alleged Negligence

Professional Services Provided

Computer consulting and support involving the supply and service of corporate computer needs, mostly selling third party security products

Allegations are that the work provided by the insured was substandard and negligent

Various faults are said to have been identified and rectified by another contractor

Litigation is in its early stages with estimated costs of $55,000

For a review and quotation, contact Business Insurance Specialists on 07 3139 3900 as your insurance broker today. We can provide coverage same day at highly competitive costing due to access to the full market.