Tech Insurance: 6 Tips to Get Your Application Approved

Source: sadlerco.com - Tech Insurance: 6 Tips to Get Your Application Approved
Author: John M. Sadler

Up to 25 percent of all Professional Liability and General Liability insurance applications are declined by the underwriters.

One reason can be that the technology company engages in a type of work that is an unacceptable risk to the underwriters. More often than not, the tech company shoots itself in the foot during the application process by not understanding the intent behind the questions or not carefully explaining the company’s actual risk characteristics.

Here we offer 6 tips that can boost your chances of getting your Professional Liability  and General Liability insurance application approved the right way without jeopardizing your coverage at the time of a claim.

1. BE TRUTHFUL: You must truthfully answer all questions on the applications and disclose important information. If you lie or don’t tell the whole truth on your application, you are setting yourself up for a claim denial should you be involved in a lawsuit. Upon notification of a claim, the claims adjuster may review your original application for material misrepresentations. A material misrepresentation is any statement that if  answered correctly would have been reason for the carrier to have denied the application.. A material misrepresentation will likely result in your claim being denied. The end result is that you will forfeit insurance-provided legal defense and any payments for settlement or adverse jury verdict.


2. PROVIDE A DETAILED DESCRIPTION OF YOUR OPERATIONS: Writing one or two sentence description on the application won’t cut it. because it will appear like you are trying to hide something about your services. This raises underwriter suspicions and will result in either a refusal to consider your application or a string of additional questions that slows down the underwriting process.


3. REPRESENT YOUR OPERATIONS ACCURATELY: Many insurance carriers that write Professional Liability (or Errors & Omissions) insurance for tech professionals will limit coverage for the types of work that are disclosed on the application. You may think that you are being clever by only checking some of the types of work that you perform, but you’re actually limiting the scope of your own coverage.


4. DON’T LIST WORK YOU HAVE NO PLANS TO PERFORM: Many applicants shoot themselves in the foot by listing a type of work that they can perform but have no intention of performing. Only list the types of work  you have been performing or know that you will perform within the next 12 months. If you have already signed a contract to perform a particular type of work or are under contract negotiations to perform a particular type of work, it should be disclosed on the application.


5. DON’T CONTRADICT INFORMATION THAT’S ON YOUR WEBSITE: Many tech professionals list broad categories of work that they can perform on their website to make themselves look more professional to their prospects. Please understand that all insurance company underwriters will do a Google search of your company name and thoroughly review your website. Any contradictory information, such as advertising work you don’t actually perform, will raise a red flag that will either result in rejection of your application or in additional questions that will slow down the underwriting process.


6. GIVE A DETAILED DESCRIPTION OF ANY HIGH RISK TYPES OF WORK: Offering this information up front may mitigate their impact. Below is a short list of high-risk end uses for your technology products and services that can result in rejection of your Professional Liability or General Liability application, depending upon your level of involvement.

• Financial transaction software


• Medical diagnostic hardware/software


• Manufacturing software (robotics, PLC, CAM)


• Computer aided design


• Safety or alarm equipment


• Utility and natural resource process (oil and gas, power, nuclear, etc.)

If you are involved in any high risk areas, it would be helpful to explain your involvement in detail on your application and to list reasons why your risk would be less than the average risk in such high risk areas. For example, if you subcontract out work in these high risk areas to another tech professional who carries both Professional Liability and General Liability, this should be mentioned.

We’ll be happy to answer any further questions you have, or provide you with a quote. Just call us at 800-622-7370.

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