IT Liability Insurance Yes or No?
Professionals in the information technology sector face potential liabilities from clients and third parties everyday. Clients expect good, sound advice with a quality product including installation. They rely on you to get it right so their systems work efficiently and they can get on with business. The problem is good advice and service doesnt always protect IT professionals from liability. Disgruntled clients will seek to apportion blame when things go wrong and systems break down. This can lead to claims against them for compensation and legal costs which can in turn lead to a considerable time commitment to settle or defend the claim. IT Liability policies combine Professional Indemnity (PI), Public Liability and Products Liability to cover the IT professional from a range of exposures that could arise out of the services performed for a client.
Who is eligible for coverage? IT Liability insurance policies normally will cover the following: The company, including any subsidiaries (held or acquired during the policy period); -All past, present or future partners, directors and executives; -All past, present or future employees; and -Upon request, Contractors, Sub-contractors as individuals as well as liability arising out of the work done on behalf of the entity. IT policies need to give cover to all persons who provide IT services including those who may not be rendering these services but may be named in a claim due to their position within the company.
Computer consultants who should consider purchasing IT Liability coverage include companies involved in the following services: -computer consultants -hardware/software developers, resellers & manufacturers -internet service providers -web hosting -internet services -telecommunication services -IT recruitment and placement services
What do IT Liability insurance provide cover for? IT Liability insurance provides cover for a break of the policyholders professional duty to a client in the performance of information technology services. This is the professional indemnity cover. It also provides cover for products and public liability. Depending on the insurer, professional indemnity for a break of IT services can all sorts of different activities however, the individual entities’ activities are sometimes referred to in schedule of the policy and therefore the policy will only cover the specific services listed.
Additional Coverage available – IT Liability Policy In addition, computer consultant professional indemnity policies will include cover for: -Misleading and Deceptive conduct: in respect of the work to be performed; -Defamation; -Breach of Intellectual Property Rights: of a customer, client or third party including competitors; -Loss of Documents/Data; -Defence Costs associated with covered claims.
Products and Public Liability? As part of IT Liability coverage, many insurers give products and public liability for claims coming out of the products the IT professional may install into a clients system or bodily injury which may occur on their premises arising from the work performed by the professional. To a degree, the inclusion of this coverage is a response to commercial contracts between IT professional and clients needing this type of insurances in addition to professional indemnity.
The benefit of having professional indemnity, products liability and public liability contained in the same policy is that, in theory, no claims can slip through the gaps. If the exposures were covered on separate policies a situation may arise where two insurers covering separate exposures deny indemnity of the claim by arguing that the other policy should have been triggered opposed to the professional indemnity or the products/public liability policy.
Professional Indemnity- Claims made & notified The PI insurance section of IT Liability policies is issued on a claims-made and notified basis. What this means is that the policy only covers claims first made against the IT professional during the policy period and notified to the insurer in writing during the Policy Period. It should be noted that the IT Liability policies do not provide cover for any claims made against the IT professional during the policy period if at any time prior to the commencement of the policy period you became aware of facts which might give rise to those claims.
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