Technology companies have changed the way the world is connected, either over the Internet or via the use of smartphones and other devices. Technology errors and omissions (E&O) insurance is intended to cover a financial loss of a third party arising from failure of the insured’s product to perform as intended or expected, and any resulting financial loss of a third party arising from an act, or error or omission committed in the course of providing services for another.
If a product fails to perform properly, or even worse, winds up destroying or losing valuable information (i.e. files or confidential information) it could wind up causing your client to experience a huge financial loss. For example, let’s say that you were to sell component parts to a computer manufacturer and they fail to perform a certain function as promised, your technology insurance from North Star in Massachusetts will address the issue and pay any damages according to the policy limits.
Why buy tech E&O insurance?
Tech E&O risks are unique and generally aren’t covered by your existing commercial general liability (CGL) insurance. You need a policy that addresses technology activities where there may exist tech E&O risks. Some exclusion in a policy may bar coverage under a CGL policy in instances where tangible property is rendered useless due to the fact that it incorporates the insured’s product or work and that product or work is the cause of the failure. Depending on certain facts, an exclusion can bar coverage for any such claim.
Many media companies simply do not feel a need to buy tech E&O insurance, but as society continues to advance further into the computer age, with the burgeoning of e-commerce, more of these types of companies will likely face tech E&O exposures. That will certainly be the case if any one of the company’s subsidiaries is providing tech products and/or services to others.
If you are a risk manager working in the field of technology and decide that your organization will have tech E&O exposures to contend with, you should seriously consider buying tech E&O insurance from North Star in Massachusetts to help protect the company’s interests.