What Is Professional Liability Insurance?

Source: sadlerco.com - What Is Professional Liability Insurance?
Author: John M. Sadler

And why it’s important

A professional is someone whose vocation or occupation requires special training and skill. Historically, lawyers, accountants, architects, engineers, and medical professionals were the sole occupations that fell into this category as their industries established strict regulation requirements and codes of conduct. In order to practice in these fields, it was necessary to undergo formal training and pass a state licensing exam to be provided with credentials. The first Professional Liability Insurance policies, also known as Errors and Omissions coverage, were devoted exclusively to this elite group.

Gradually, other types of professionals requiring Professional Liability Insurance (Errors and Omissions Insurance) such as real estate agents, business consultants, social services counselors, educators, and computer technology professionals, began to emerge. While these other classes are often referred to as quasi-professionals under the eyes of the law, they have already developed their own industry regulations for education, testing, and accreditation.

Protection for current classes of professionals

Miscellaneous Professional Liability insurance  policies have been developed to address many of the litigation concerns of these new classes of professionals, including computer information technology professionals.

Professional Liability  insurance provides protection against certain types of lawsuits arising out of negligent acts, errors, or omissions committed during business activities and that result primarily in economic damages that are not related to bodily injury, property damage, personal injury, or advertising injury.

Why Professional Liability insurance is important

It is important to understand that a Professional Liability insurance policy is meant to dovetail with a General Liability policy. The General Liability policy covers lawsuits alleging bodily injury, property damage, personal injury, and advertising injury. As a result, these types of injuries are not covered by a Professional Liability insurance policy.

Professional Liability insurance is important because it fills a glaring gap in the General Liability policy, which has a professional services exclusion that takes away coverage for lawsuits resulting from services rendered or failure to render professional services. Professional Liability insurance policies are meant to respond to lawsuits alleging only economic damages where the client has lost money as a result of a negligent act, error, or omission in the performance of the professional services.The definition of Errors and Omissions insurance can vary per policy form.

A good Professional Liability insurance policy is necessary to safeguard the assets of any company that provides professional services.

 

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Tech Company Advertising Injury Coverage

Source: sadlerco.com - Tech Company Advertising Injury Coverage
Author: John M. Sadler

Why it’s necessary

The standard General Liability policy covers personal injury and advertising injury unless the insured is in the business of advertising, broadcasting, publishing, or telecasting. For this reason, there is no coverage for IT firms that are in the business of designing websites, determining content, providing content, or providing internet access.

Why do tech firms need personal injury coverage? Coverage may be needed to against an allegation of slander, libel, or oral or written publication that violates a person’s right of privacy. It is not too difficult to see how a tech firm could get sued under these circumstances. Coverage may also be needed for advertisement injury to protect against allegation of infringement of copyright, trade dress, or slogan in your advertisement. The key word is advertisement. There is no coverage for infringement of copyright, trade mark, trade dress, or slogan unless they occur in an advertisement.

What’s not covered

An exclusion in the policy form eliminates coverage for injury arising out of electronic chat rooms or bulletin boards that the insured hosts, owns, or exercises control over. In addition, there is an exclusion arising out of the unauthorized use of another’s name or product in your email address, domain name, meta tag, or similar tactic used to mislead the someone else’s potential customers.

It is obvious that the standard General Liability form does not adequately protect tech companies or IT professionals against these important exposures. As a result, coverage can be sought as part of a Professional Liability or Errors & Omissions policy form. These policies can add essential coverages for tech firms in the business of advertising or publishing and violation of a person’s right of privacy or undue publicity, intellectual property infringements, etc.

It is strongly recommended that tech companies or IT professionals deal with a tech insurance specialist to make sure that their coverage needs are addressed.

 

Read Full Story: http://www.sadlerco.com/tech-company-personal-advertising-injury-coverages/

Tech Professional Services Not Covered by General Liability

Source: sadlerco.com - Tech Professional Services Not Covered by General Liability
Author: John M. Sadler

But exclusions can be overcome

Tech companies and IT professionals need General Liability to provide coverage for negligence claims or lawsuits alleging bodily injury, property damage, personal injury, and advertising injury.

Many General Liability policy forms have an exclusion which takes away coverage for a laundry list of professional services including legal, accounting, architectural, engineering, medical, health care and computer consulting, design, or programming services including web site design. 

Obviously, this presents a problem for tech companies or IT professionals seeking General Liability coverage. But the problem can be solved by an insurance professional who specializes in insuring tech and IT risks. Carriers like The Hartford can eliminate this harmful Professional Services exclusion by endorsing the policy to add back coverage for tech professional services. Hartford has a special “Technology Services Coverage” endorsement for this purpose.

Tech professionals with General Liability carriers that don’t address the Professional Services Exclusion with a buyback endorsement can find needed coverage under a Professional Liability policy that offers a Contingent Bodily Injury/Property Damage endorsement.

Be sure to avoid these types of problems by dealing with a tech insurance specialist. If you have questions or would like help determining your insurance needs, contact us at 800-622-7370.

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Loss of Electronic Data

Source: sadlerco.com - Loss of Electronic Data
Author: John M. Sadler

It’s not covered under a General Liability policy

Standard business General Liability policies don’t adequately cover the liability risk of property damage to electronic data.

Service or contracting businesses can cause property damage resulting in loss of or damage to a third party’s digital data that is housed on their computer system. This exposure is not limited to IT firms.

Understanding the terminology

The term property damage used on standard General Liability forms is defined as

• physical injury to tangible property including loss of use thereof; and

• loss of use of tangible property that is not injured.

According to these definitions, electronic data is not tangible property.

Electronic data is information, facts, or programs stored as or on, created or used on, or transmitted to or from computer software, hard discs, CD-ROMS, tapes, drives, cells, data processing devices, or any other media used with electronically controlled equipment.

What you can do

This problem can be resolved by the addition of various endorsements to cover property damage to electronic data. The cost is usually minimal.

However, some General Liability carriers that cater to IT firms will not add the endorsements. As a result, IT firms may need to verify that their Professional Liability (Errors & Omissions Liability) policy will cover this exposure. The key is to locate the definition of “tangible property” and find out if electronic data is included.

 

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Insider hacking poses huge cyber risk

Source: sadlerco.com - Insider hacking poses huge cyber risk
Author: John M. Sadler

Insiders account for most cyber theft losses

Outside hackers, whether domestic or part of criminal gangs in Eastern Europe and Asia, get most of the media attention. However, a bigger cyber risk is inside jobs by a company’s own employees. These crimes account for 70 percent of all security incidents that result in losses, according to some sources.

This is known as authorized access for unauthorized use.

Disgruntled or simply dishonest employees, independent contractors, or employees of independent contractors may steal confidential information such as credit card numbers, bank account information, or proprietary information such as trade secrets or intellectual property.

Most Cyber Liability policies only cover unauthorized access by outsiders. Make sure that your policy also covers authorized access for unauthorized reasons.

For a assistance determining your coverage needs, please call us at 800-622-7370

 

Source: Do You Need Coverage For Cyber Risks? The John Liner Letter, Vol. 43, No. 7, June 2006.

 

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Data Breaches Growing Rapidly

Source: sadlerco.com - Data Breaches Growing Rapidly
Author: John M. Sadler

Tech Companies Uninsured

Over the past several years, there have been over 225 million reported consumer data breaches. This year alone, there have been more than 30 million reported security breaches of consumer data. No one knows the actual numbers since it is suspected that most security breaches are unreported.

Most tech firms and regular businesses with exposure don’t have insurance to cover this expensive peril. Liability for the following categories of expenses are common in these breaches of security:

• Class action lawsuits


• Regulatory fines, fees, penalties


• Statutory notification expenses

Tech companies that collect confidential information or assist clients in doing so must make sure that their Professional Liability/Errors & Omissions policy is specially endorsed to respond to breach of security lawsuits. Non tech companies with exposure must make sure that their Cyber Liability policy does the same.

Source: S.H. Smith & Company, Inc. E Bulletin, 10-19-08

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Advertising Injury Coverage Gaps Can Affect Non-Media Firms

Source: sadlerco.com - Advertising Injury Coverage Gaps Can Affect Non-Media Firms
Author: Jim Ferguson

Cyber Liability insurance is required for intellectual infringement protection

The 1986 ISO General Liability policy form provided broad coverage for advertising injury for non-media companies. However, due to recent restrictions on advertising injury coverage under a General Liability policy, many non-media companies should  consider purchasing of a Media Liability (offline) or Cyber Liability (online) policy in order to close certain coverage gaps.

The 2001 ISO version of the General Liability form includes a new exclusion that eliminates coverage for “injury arising out of the infringement of copyright, patent, trademark, trade secret, or other intellectual property rights.” However, the new exclusion excepts “ infringement in your advertisement of copyright, trade dress, or slogan.” Therefore, coverage is now specifically excluded for all trademark and trade secret claims. In addition, coverage for the three remaining types of intellectual property claims (copyright, trade dress, or slogan) is dependent upon such offenses arising out of an advertisement.

Breaking the exclusion down

Within the definition of advertisement, only infringements that occur in the advertisement itself are covered. The new 2001 edition includes the following new restrictions on Internet activity:

• Advertisement with respect to a website means only that part of the website that is about “your products, goods or services for the purposes of attracting customers or supporters.”


• Coverage is eliminated for claims “rising out of an electronic chat room or bulletin board that the (insured) hosts, owns, or over which the (insured) exercises control.” It is likely that the use of blogs, Facebook, Twitter, and other social media fall under this exclusion.


• Coverage is also eliminated for “unauthorized use of another’s name or product in the [insured’s] e-mail address, domain name or meta-tag, or any other similar tactics to mislead another’s potential customers.” One area of concern that has not yet been clarified by the courts is use of trademarked terms in meta-tags.

How this can affect your company

Below are some common situations where the above-mentioned restrictions can eliminate coverage for non-media companies:

• Claims for copyright infringement arising out of text, photographs or other content that are not part of an online advertisement. The use generic photos in areas that are not actually part of a specific product advertisement on company  websites  is a common source of litigation. Providers of stock photos are using watermarking technology to search the Internet for instances of the unauthorized use of their photographs and many law firms are specializing in providing representation in this area.


• Trade dress claims arising out the look and feel of a website, blog, social media, etc. that is not part of an online advertisement. These involve navigation (ex: buttons, bars), color schemes, hyper links, menus, etc.


• Online comparative advertising where your product is represented as being bigger, better, faster, etc. as compared to the competition. These representations may result in claims for false or misleading advertising and unfair competition under the Lanham Act or various state statutes. However, if these representations are directed at a specific competitor, they may be covered under advertising injury.


• Product packaging that too closely resembles a competitor’s may result in liability for trade dress infringement. These claims may be excluded because the courts may not consider the product packaging to be part of an advertisement.

If any of these instances of potential uncovered claims are a concern, a business should strongly consider adding Media Liability  or Cyber Liability policies.

Source: Elizabeth C. Kock and Jay Ward Brown, Levine Sullivan Koch & Shultz, LLP; Risk & Insurance; December 2011.

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