Technology Insurance - Liability Coverage In The Digital Age

Any young occupant of a corporate workplace who has had their PC crash knows
the feeling of dread when the IT expert emerges from the basement, rambles
into the cubicle and says "Alright.
What did you do?" It seems, however, that has IT has absorbed the science of
networking and has also grown increasingly complex, liability for software
firms, IT firms and internet businesses has become an issue that transcends
the cubicle occupant.

Technology insurance is in essence liability insurance. It is designed to
protect software and IT companies whose programming errors result in
business setbacks for corporations using their products and services.
Further, technology insurance refers to policies that protect internet
businesses from unauthorized release of private information held on their
servers. There are some principal categories of technology insurance that
mirror, to some degree, the general categories of business liability.

* Technology errors and omissions insurance provides protection if your
software or programming fails to perform as promised, or if errors in
programming or product structure result in major client problems. "Cyber
liability" in general addresses first- and third-party risks associated with
e-business, the Internet, networks and informational assets

* Directors and Officers liability insurance is now available to those
functioning in the startup and IPO arena. This insurance covers the
principal players not in established firms so much as in those that fail to
deliver the commercial success that early investors anticipated.

More specific forms of technology insurance include specific policies
relating to:

* Network management
* Computer consulting
* Online transactional business
* Disaster recovery
* Data processing/programming services
* Intellectual property insurance

With any liability insurance policy, the question of how much you need is
directly related to how much you are protecting in the way of assets. One of
the important components of liability insurance in any of these fields is
coverage for legal expenses.
Businesses attempting to quantify damage to their functionality and put a
price to their losses as a result of digital malfunction are going to be
faced with a complicated burden of proof. Obscure issues generally mean
longer periods of deliberation and higher legal bills.

In the case of protection from online theft from hackers, the liability
parameters for those sorts of incidents remain largely undefined. There have
been no major cases where awards were made in class actions due to the
release of thousands of individual's private records.

Websites that provide a platform for online business transactions usually
have a policy agreement that users must read and check off before they can
utilize the site. That probably cuts down on frivolous lawsuits over sour
transactions, but it does not provide anything like complete protection for
the site operator.

This is "first person and third person" coverage that is somewhat different
from standard product liability insurance because the only product the site
provides is the transaction platform itself. Nevertheless, insurance covers
the inevitable legal activity that any business involved in any fashion with
a high volume of transactions is going to encounter.

The answer to "how much should I have?" is "consult your broker." Liability
insurance hasn't changed; only the tools for mismanagement and the types of
errors have changed. A good insurance broker can assess what coverage is
necessary and clauses are "window dressing" provided by the underwriter.

About The Author: Madison Lockwood is a customer relations associate for
http://www.apollohosting.com. She helps clients understand how a website may
benefit them both personally and professionally. Apollo Hosting provides
website hosting, ecommerce hosting, & VPS hosting to a wide range of
customers.