Insuring Innovation!
CyberFirst Coverage for Technology Companies
By Rick Cline | February 27, 2016
Technology is everywhere. So are the threats. CyberFirst® provides a powerful modular approach to insurance protection that goes well beyond a traditional general liability policy. Today’s technology companies face a growing number of threats including errors & omissions, intellectual property infringement, and data breaches — any of which can have devastating consequences for a business.
CyberFirst® coverage for technology companies includes four key modules:
- Technology Errors & Omissions Liability
- Network & Information Security Liability
- Communications & Media Liability
- Expense Reimbursement Coverage
Technology Errors & Omissions Liability
This coverage protects against claims arising from product or service failures that cause economic loss due to errors or negligence. Defense costs alone can be catastrophic. This module addresses situations where contracts are challenged or quality issues arise.
Claim Scenario – Radio Unit: A design error in schematics causes incorrect capacitor installation. Between 12,000-14,000 units fail before discovery. The client seeks damages recovery.
Claim Scenario – Software: An enterprise labor force software project falls behind schedule due to client scope changes. The client terminates the contract and sues for lost profits from business disruption.
Network & Information Security Liability
This coverage protects against data theft, virus transmission, and unauthorized access. It covers situations where private customer information is compromised through stolen devices or malicious code, addressing cyber liability gaps that exist in standard general liability policies.
Claim Scenario – Stolen Laptop: An employee’s laptop is stolen containing customer financial data. Customers sue for damages resulting from the failure to protect their private information.
Claim Scenario – Virus Transmission: An employee downloads a destructive virus that spreads through the network. A client downloads infected data causing a network shutdown and data loss. The client sues for damages.
Communications & Media Liability
This module guards against copyright and trademark infringement claims. The average defense cost for infringement suits exceeds $250,000. Coverage extends to plagiarism and unauthorized use of advertising material.
Claim Scenario – Logo Infringement: During a website redesign, a new product marketing logo is created. Another company files a trademark infringement suit seeking damages and an injunction.
Claim Scenario – Advertising Material: Website and direct mail advertisements contain a competitor’s claimed proprietary material. The competitor sues for unauthorized use damages.
Expense Reimbursement Coverage
This first-party protection addresses costs from data breaches, which are occurring at alarming — and growing — rates. It includes eight optional insuring agreements:
- Security Breach Notification and Remediation Expenses
- Crisis Management Service Expenses
- Business Interruption and Additional Expenses
- Extortion Expenses
- Computer Program and Electronic Data Restoration Expenses
- Computer Fraud
- Funds Transfer Fraud
- Telecommunications Theft
Security Breach Notification and Remediation Expenses Coverage
This coverage includes:
- Determine breach cause and identify affected individuals
- Develop and send notification materials
- Provide 365-day credit monitoring
- Provide call center services
Claim Scenario: A cyber criminal hacks an internal system, stealing names, addresses, and credit card information for over 50,000 members. Expenses include a breach response firm, notification costs, credit monitoring, call center support, and identity fraud protection.
Crisis Management Service Expenses Coverage
This coverage pays for public relations expenses to mitigate negative publicity resulting from covered losses.
Claim Scenario: A Chief Customer Service Officer’s laptop is stolen containing over 100,000 donor records. A public relations firm is hired to restore confidence and mitigate negative publicity.
Coverage Advantages
Bottom Line Concerns? Technology Errors & Omissions Liability protects your bottom line when products or services fail to perform as expected.
Privacy Concerns? Network & Information Security Liability addresses the growing risk of data breaches and cyber attacks.
Infringement Concerns? Communications & Media Liability guards against costly intellectual property claims.
Expense Concerns? Expense Reimbursement Coverage helps manage the significant costs associated with breach response and recovery.
For more information or to get a quote, contact us at rick@allaccessins.com or call (303) 932-1700.