Gallagher offers tailored insurance solutions to protect technology companies against unique exposures requiring specialized expertise. By mitigating risks associated with innovation, Gallagher helps technology businesses concentrate on innovation instead of worrying about insurance risks.
An E&O policy protects your business against claims that arise from professional mistakes and oversights made by its staff, such as errors in judgment. This coverage can be included in your general liability policy or purchased separately.
Product Liability
Technology companies frequently provide services or produce products that could lead to damages, injuries, or claims for damages or claims of various sorts. Like all businesses, prudent technology firms should maintain core commercial insurance policies such as general liability (CGL), workers’ compensation, and auto coverage as a minimum baseline requirement. They may also wish to consider adding specialty coverages that fill gaps in traditional CGL policies or standard commercial coverages.
An average product liability policy typically provides coverage for the following:
Third-party injuries or property damages caused by products manufactured by a company (including parts used to manufacture other products). This may include claims for economic losses such as medical expenses and lost income and noneconomic losses such as pain, suffering, and loss of enjoyment of life.
Damage is caused by design or manufacturing defects, such as equipment that malfunctions and causes injury. Also covered are claims for inadequate warning or usage instructions or failure to warn about risks; most CGL policies exclude such claims; therefore, an IP policy might be needed instead to cover them.
Technology companies typically require professional liability coverage to address client dissatisfaction with technology projects. While this type of claim might not fall under standard commercial policies’ coverage due to errors and omissions issues, an E&O policy – commonly referred to as software developers’ errors and omissions insurance (tech E&O) can help cover legal fees or settlement payments necessary to resolve it quickly and amicably.
An E&O policy may also be helpful if a client alleges that a tech company has fallen behind schedule on project deadlines, which no one wants to happen but sometimes circumstances beyond our control cause project delays. When this occurs, and the suit is filed against our firm, this coverage helps cover legal costs or settlement payments made against us; combined with a third-party cyber liability policy, it becomes a powerful weapon against even the most severe technology-related claims.
Cyber Liability
Cyber liability insurance protects third-party losses caused by technology company errors. This coverage usually extends to business interruption, third-party costs associated with data breach responses, credit monitoring services, and legal defense expenses, as well as forensic investigations, regulatory fines, and losses associated with the loss or theft of sensitive information such as Social Security numbers, home addresses, email addresses or credit card data; it can even cover extortion threats and ransom payments. Policyholders may even purchase business income loss coverage that reimburses their revenue lost while recovering from cyber incidents.
Cyber liability policies benefit companies that collect customer and financial data online or on computers, such as banks, retailers, real estate agencies, and law firms. Their risk stems from hackers potentially entering their systems to steal this data and use it maliciously against them or their clients; the most frequent types of cyber incidents include:
Tech E&O (errors and omissions) policies complement cyber insurance to offer increased protection to technology businesses. An E&O policy protects businesses when clients file claims related to software bugs or fail to follow security protocols; in certain instances, it may even cover breaches of contract.
Many technology E&O policies provide both first- and third-party coverage. First-party coverage covers costs related to repairing or replacing computer systems damaged due to cyber incidents and expenses incurred in returning data stored on these systems. Third-party coverage, on the other hand, applies when there is a claim that their product or service violated client privacy by disclosing personal information due to an error.
Cyber and tech E&O policies should usually be sold as one package because they cover various risks for tech businesses. If a tech business approaches you by asking only for cyber insurance, explain why a quality E&O policy would also make sense as part of its overall portfolio of tech coverage.
Directors & Officers Liability
Directors’ and officers’ (D&O) insurance is vital to any technology company’s insurance portfolio, protecting board members against possible lawsuits for misdeeds related to their management duties. While general liability or errors and omissions policies may cover claims related to them as business people, these policies don’t generally offer compensation in case of fines and penalties associated with illegal acts – that’s where D&O coverage comes in handy!
As corporate transparency and accountability increase, D&O insurance has become more relevant. A D&O policy can protect company leaders from lawsuits brought against them by stockholders, employees, clients, or regulatory bodies; plus, potential investors often require proof of coverage before investing.
D&O insurance typically provides defense costs, judgments, and settlements resulting from third-party claims alleging wrongdoing by insured directors and officers. Such allegations could involve negligence, shareholder actions, fraud, and other business-related issues. Likewise, it covers expenses associated with attending investigations into company affairs and criminal or civil trials arising out of them.
Additionally, D&O policies typically cover fines issued by government regulatory bodies for violations of consumer protection, workplace safety, taxation, and environmental or securities regulations. While these are all standard risks that D&O policies protect, they can be tailored specifically for your client’s business by including any additional risks.
D&O policies can be purchased as standalone products or add-ons to general liability or professional indemnity policies. Though D&O insurance isn’t mandatory, most tech companies opt for it when planning their eventual IPO or recruiting experts in particular fields. Claims related to bodily injuries or property damages must be covered under commercial general liability policies; any intentional criminal or fraudulent activities need a separate crime policy coverage – something policyholders should carefully consider before purchasing D&O coverage.
Employment Practices Liability
Employers in every industry are at increased risk for lawsuits alleging unlawful workplace practices such as wrongful termination, harassment, and discrimination. Such suits can be extremely costly to defend, especially for smaller firms without enough cash reserves to pay significant judgments or settlements. Luckily, insurance can provide relief.
Technology companies should invest in employment practices liability insurance (EPLI, or EPL) to protect against legal expenses associated with employee and job applicant lawsuits over workplace issues. EPLI policies typically cover legal costs arising from claims brought by current, former, and prospective employees alleging unfair treatment such as retaliation, sexual harassment, wrongful termination, and violations of state or federal employment laws.
Tech companies can purchase EPLI as a standalone policy or an endorsement of a business owner’s policy (BOP) or general liability policy. BOPs tend to provide higher limits of EPLI coverage than individual policies, making this more cost-effective option suitable for many small tech businesses.
As more employees and job applicants become aware of workplace issues, lawsuits filed by employees and applicants against businesses of all sizes are increasing in number – leading many smaller tech companies to seek EPLI insurance policies for protection from such costly claims.
Establishing effective HR policies and training programs is an excellent way to lower the risk of an EPLI claim. Such policies will enable your company to develop consistent hiring and firing procedures, thus helping prevent employment-related lawsuits. Furthermore, working with an experienced insurance agent who understands employment law will enable your organization to create a proactive risk management program designed to deter claims in the future.
Tech companies looking to minimize their chances of a claim should work closely with their insurer during any investigation or defense of an asserted claim, following all instructions and providing requested documentation promptly and thoroughly. They should also consider consulting an employment law specialist to comply with all regulations.
