IT Liability FAQ

Professional Liability insurance for IT professionals,

Sometimes called errors and omissions or E&O insurance, is available from a wide range of specialty lines insurers. Coverage and pricing varies greatly depending upon the type of organization, size, location and the specific services provided.

Because this coverage is a new and evolving it continues to change rapidly. Specific coverage provisions are important for IT professionals. One example of this is an IT professional's need for liability coverage for unauthorized access and virus protection. This coverage would protect the IT professional if its action caused a virus to be introduced to a client.

Limits and deductibles vary with the size and type of insured. Standard limits for most small to medium sized organizations start at $1million. Policy forms vary significantly, but the majority are claims made forms with defense costs included within the limit and deductibles.

Public Liability insurance for IT professionals,

Internet-related professional exposures for Information Technology (Internet) Professionals arise from services provided to clients such as web site development, but can also arise from damage a professional can cause to a client's systems resources. This latter exposure includes virus transmission and loss of data. In addition, professional exposures can extend beyond traditional economic loss to contingent bodily injury or property damage for some professionals.

Media exposures arise from intellectual property, defamation and invasion of privacy claims. The intellectual property exposures, such as copyright or trademark infringement, are an unpredictable and rapidly evolving area because the law as it applies to the Internet is not clearly defined. For example, no clear definition has been established for standards of copyright infringement. Does a link from another site to your content infringe on your copyrights? The litigation involving Internet-based music sharing is delving into this new territory.

Security breaches are another area of significant exposure for companies involved with the Internet. The introduction of viruses and unauthorized access are well known examples. Theft of data and extortion are less publicized but equally important exposure areas. Recently, privacy issues related to e-commerce initiatives have gained national prominence, and employee actions have become a significant source of security breaches. 

Latest News

D&O premium pool ‘must treble’ to return to profitability

A new report – called "Show Me The Money!" by insurer XL Catlin and law firm Wotton + Kearney – is the second in a series of three white papers on securities class actions and their impact on the Directors & Officers Liability (D&O) market. The main conclusion is that Directors’ and officers’ (D&O) insurance premiums are under-priced significantly and need to rise strongly to restore profitability. The main risk areas are those exposed to securities class actions, 

It says Directors & Officer's Side A, Side B and Side C cover has been chronically underpriced since at least 2011, while the frequency of class actions is increasing as more plaintiff lawyers and litigation funders enter the space.

The analysis suggests last year’s overall premium pool of about $210 million would need to increase by at least three times to establish a profitable market, if it is assumed all other factors stay unchanged.

“Recent market developments would indicate most D&O insurers are now endeavouring to restore some semblance of profitability to their portfolios after years of market losses,” the report says.

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75% of Cyclone Debbie claims settled

In the 6 months since Cyclone Debbie devastated Queensland and parts of northern New South Wales:

• more than 31,000 homes and business have been repaired or received settlements from their insurance company

• more than 20,000 families have had possessions replaced

• more than 4,500 motor vehicles have been repaired or new vehicles provided

• hundreds of local builders and trades have been working on properties to repair the damage and destruction caused by the cyclone

• over $5 million has been paid EACH DAY to assist local communities, residents and businesses.

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