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General Liability, E&O, and Cyber: Understanding 3 Coverages for Technology Professionals

General Liability, E&O, and Cyber: Understanding 3 Coverages for Technology Professionals

Tuesday, May 5, 2015/Categories: Cyber Liability Insurance, Errors and Omissions / Professional Liability Insurance, Contractor Insurance

As an IT professional, you know how important it is to get your tech to fit together. Clients often expect that one IT solution will be the answer to all their needs. You have to explain that they'll actually need a few different pieces of software to accomplish what they want. Your small business insurance works much the same way.

There's no "comprehensive" insurance policy that will cover all your risks. Each type of coverage shields you from various financial impacts that could potentially bankrupt your IT business. In this guide, let's go over three basic insurance policies for tech professionals:

  • General Liability Insurance.
  • Errors and Omissions Insurance (Professional Liability Insurance).
  • Cyber Liability Insurance.

General Liability Insurance for IT Contractors

A General Liability Insurance policy may offer financial protection for lawsuits when third parties sue your IT business over…

  • Bodily injuries.
  • Damage to property.
  • Copyright infringement.
  • Slander / libel.

Say you're visiting a client at their office. As they give you a tour, you bump into a desk, spilling a cup of coffee onto a laptop. The client sues you for the damaged laptop and the losses that come from the data lost on their machine. In a case like this, General Liability Insurance may cover…

  • Lawyers' fees.
  • Court-mandated damages you owe the client.
  • A settlement to pay damages to the client and resolve the lawsuit amicably.
  • Miscellaneous court costs.

Errors and Omissions Insurance for IT Professionals

Errors and Omissions Insurance (aka Professional Liability Insurance) may pay for lawsuits when a client sues you over problems with your IT, including…

  • Configuration problems.
  • Professional negligence.
  • Data loss.
  • Security / data breaches.
  • Malfunctions, latency, and performance issues.
  • Missed deadlines and projects gone over budget.

Because it's so important for tech professionals, let's talk about the data breach coverage that comes with Errors and Omissions Insurance. IT professionals can get E&O that comes with third-party cyber liability insurance, which may pay for lawsuits when a client sues you over a data security incident like a cyber attack or data breach.

IT consultants are in a difficult place. You're responsible for delivering secure, functioning IT. Any problems, whether performance- or security-related issues, you could be blamed. To learn more about your E&O liabilities, see the post "Why Customers Are Your Biggest Professional Liability."

Cyber Liability Insurance for IT Consultants

Do IT professionals need Cyber Liability Insurance? The answer actually depends on the kind of IT work your do.

Unlike E&O's cyber coverage, Cyber Liability Insurance (also called Data Breach Insurance) only covers data breaches and cyber attacks that happen on your own computers.

Cyber Liability Insurance may pay for the cost to cleanup a breach or security incident that occurs on your own device or network. If your company's network was hacked and your records were stolen, Cyber Insurance could cover…

  • Notification of parties affected by the breach.
  • Credit monitoring for customers.
  • Consultations from crisis management and PR teams.
  • Investigations into the breach.

Many IT consultants don't need Cyber Liability Insurance because they don't have enough protected data on their own network that they need to insure against data breaches. Actually, it's often your clients who can benefit from having Cyber Liability Insurance.

However, for some tech professionals this insurance can offer important coverage. For instance, database administrators, web hosts, and other IT professionals who curate and safeguard client data may benefit from Cyber Insurance.

How to Get IT Business Insurance for Less

These three insurance policies complement each other:

  • General Liability can cover many basic lawsuit risks.
  • E&O may cover lawsuits from disgruntled clients.
  • Cyber Liability Insurance may cover data breaches that happen on your network.

Fortunately, insureon's agents can often bundle the coverage you want in a Business Owner's Policy – a small business insurance package.

BOPs can help you save money while getting multiple basic tech insurance policies for your company. If you want a combination of the policies listed above (or other coverages), talk with our agents about building a low-cost insurance bundle for your business.

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