Technology companies improve the way we work and the way we live, creating a high demand for their innovative products and services. This demand pushes daily advances in the technology itself and the service solutions for companies that rely on it. As a result, technology companies face an extra dimension of risk that other companies aren’t exposed to. This article outlines those risks and explains how technology insurance policies can help you protect your tech company from liability.
Insurance for Technology Companies
There are insurance policies that all companies, regardless of industry, need as part of their risk management strategies. Technology companies face the same basic risks and liabilities as other commercial operators. Here are some fundamental coverages that would likely be packaged along with your specific technology insurance coverage:
Commercial general liability insurance protects you from accidental injury or property damage that results from your business operations.
Commercial property insurance covers your physical building from damage due to fire, theft, vandalism, flooding, etc.
Cyber data and privacy breach for your own company’s records. If you maintain a client’s records you would need another policy that covers that service. See below.
Generally speaking, the insurance policy that addresses your technology company’s specific business operations is part of an Errors and Omissions (E&O) policy. We’ve outlined some tech companies below and the risks unique to each. Coverage in a technology insurance policy is mainly designed for protection against legal liability.
Specific Technology Insurance Coverages
Technology Insurance for Software Developers
Software engineers, programmers and developers can be exposed to legal liability if:
- The product doesn’t work properly (coding errors)
- The software isn’t delivered on time
- The software doesn’t meet the agreed-upon functionality
Insurance for software developers is designed to protect them against lawsuits that may arise from mistakes made that cost their clients money.
Insurance for IT Service Providers
If your company provides IT support for clients that facilitates their: operational, administrative, sales, distributions or any other processes, any kind of malfunction on your end could disrupt your client’s business operations. Something as simple as a software update can trigger a service interruption.
IT service providers can mitigate their risks if a mistake or unforeseen event puts them on the hook for their clients’ losses.
Insurance for App Developers
App developers are also exposed to risks and possible legal action resulting from accusations of:
- copyright infringement of code or images
- technical glitches
- late release of app
Policies specifically for app developers address the unique risks they face.
Insurance for Manufacturers of Electronics and Telecommunication Components
Manufacturers of electronics and telecommunications components have to be wary of the risks they face as well. Those risks increase exponentially if they use components from other manufacturers or distributors in their products. If you manufacture electronic and/or telecommunications components you could potentially face accusations of:
- faulty or counterfeit parts
- mislabeled parts
- used parts sold as new
- products not meeting specifications
A manufacturer could also be held liable for products that damage a client’s system.
Insurance Computer Programming Services
Computer programmers can perform any number of tasks including writing or updating programs or repairs and modifications of existing programs. Programmers are also involved in debugging and testing.
As a programmer you could be liable if your mistakes impact your client’s business. If an error in your code or a bug causes a client to lose money or productivity, they may sue to recover their losses.
Insurance coverage for the risks computer programmers face is an essential part of your business coverage as a programmer.
Insurance for Computer Support, Rental, Maintenance, Repair
As a supplier of computers, support and maintenance services, your clients trust you and your products and services with their most sensitive information.
If a mistake in your service causes:
- data loss
- hardware or software damage
- data breaches
- loss of business
- lost productivity
and your clients can show that you are at fault, you may face litigation for damages. An insurance policy covering your liability as a technician can protect you from unfortunate mistakes.
Insurance for Computer Facilities Management Services
Companies that act as a third party computer facilities management service, whether on-site or off-site, and offer management of computer operations and data processing are similarly liable for their services as other tech companies are.
If an error or breakdown in your services can be shown as the cause of your client’s losses, legal recourse may be sought. An insurance policy specific to your work as a facility management service can provide coverage.
Insurance for Information Retrieval Services
Data stored in an information retrieval service is often targeted for attack by hackers. If your information retrieval service suffers a breach or from a ransomware attack, your client’s valuable data could be exposed, exposing you to liability.
For any company providing information retrieval services, an insurance policy that protects you from massive legal costs is vital for your business.
Insurance for Robotics Companies
With robotics and artificial intelligence use becoming more commonplace, companies that provide these products and services are exposed to more risk. Although generally well designed and built, mistakes do happen. If an accident occurs the problem could be from the manufacturing, software or AI architecture.
Insurance for robotics companies aims to protect them in case of an accident causing injury.
Insurance for Internet Service Providers (Colocation Services)
As an ISP colocation service that is responsible for providing:
- the building
- access to network connectivity
- site security
For an ISP’s servers, a breakdown in any one of those services could leave you open to liability. A comprehensive risk-management plan will include a policy that specifically addresses the vulnerabilities in providing colocation services.
Why Choose ALIGNED for Your Technology Insurance Needs
Our ALIGNED Advocates constantly keep up to date on the technology sector, issues technology companies face and the latest technology insurance products to protect our clients.