Technology, Media & Communication

Commercial liability packages provide coverage for defense costs, damages and other costs associated with claims arising from bodily injury, property damage, advertising (such as certain infringement and false advertising claims), product defects and failures, and more. When combined with property coverage on a BOP (business owners policy) or commercial package policy, coverage is often broadened to include exposures such as business income, media liability, utility interruption, and basic levels of coverage for more robust products such as E&O, EPLI and cyber. Due to the fact that endorsements can either broaden and extend coverage or limit/exclude coverage, policies should be carefully reviewed.

Errors and Omissions insurance for software developers is analogous to product liability for manufacturers. When physical property fails, it creates a potential for bodily injury or property damages, however when software and IP fail, it creates a potential for financial damages to your client. Those damages can be great, even for small clients. Developers involved with the development of software that controls/monitors machinery, equipment, automobiles or medical equipment (among others), require a more specific solution that also provide coverage for contingent bodily injury or property damages that might result from a software failure or glitch. With each policy providing significantly different terms and conditions, it is important to ensure your policy includes coverage for:

• An all inclusive definition of “professional services”
• Worldwide coverage
• Breach of contract claims
• Breach of warranty claims
• Unauthorized Access
• Delay in Delivery

Directors & Officers insurance provides:

• Direct Protection for individual directors and officers against non indemnifiable claims such as derivative claims or bankruptcy related litigation. 
• Balance sheet protection in the form of reimbursement to the entity itself for claims in which the entity indemnifies individual directors or officers
• Protection for claims asserted against the entity itself

Claims are often asserted by shareholders, investors, employees, creditors, competitors and regulatory agencies and can include:

• Claims asserting misrepresentations made in private placement memorandums
• Breaches Of Fiduciary Duties
• Anti Trust & False Advertising Claims
• Bankruptcy related claims
• Accusations of Fraud

Additional optional coverage components include:

• EPLI/Employment Liability: Provides protection for the hiring, firing and management of employees. Such claims can include wrongful termination, failure to hire/promote, harassment, discrimination, and retaliation. Optional coverage for 3rd party 
• Crime & Employee Dishonesty: Protection for the entity against theft, fraudulent invoicing schemes, warehouse theft, social engineering, etc.
• Fiduciary Liability: Protection for the directors & officers assets against losses caused to employee benefit plans

A well structured E&O policy for software developers can often include coverage for cyber liability related claims, particularly those that result in damage to your clients. Purchasing a separate "stand alone" cyber policy generally provides additional protection in the form of:  

• Balance sheet protection by reimbursing the entity for financial damages and other costs associated with data breaches and network security events.
• Fills remaining gaps or holes in the underlying E&O policy's coverage
• Responds to data breaches or cyber events that affect only the software developer (entity) such as extortion demands, network restoration costs, etc.

Claims can arise from

• Data Breaches, viruses and unauthorized access 
• Lost or stolen laptops and lost or stolen paper records
• Transmission of a virus to others
• Rasomware and extortion demands
• Media related liability
• Clerical and human errors in opening or transmitting files
• Payment processing

Workers Compensation insurance is a mandatory coverage for companies with employees (including volunteers, uninsured independent contractors, leased or part time labor). It provides coverage for employees’ wages and medical payments resulting from injuries sustained while “on the job”. Coverages to consider include “broad form all states” coverage and foreign workers compensation coverage (especially important for employees traveling abroad for business). Additional employee related coverages that should be considered include: 

• EPLI/Employment liability (protection for the hiring/firing of employees and discrimination/harassment related claims)
• Employee benefits
• ERISA/Fiduciary coverage (for the administration of employee benefits)
• Long term disability
• Kidnap & Ransom (for employees traveling abroad for business)

Crime & fidelity insurance provides protection for the entity against financial losses resulting from crime, theft and dishonest acts committed by employees, executives, independent contractors and other parties. Claims can include theft of money or securities, forgery, alteration, computer fraud, fraudulent invoicing, credit card and funds transfer fraud and more. More modern schemes include social engineering attacks (such as business email compromise, also known as CEO fraud).

Third party crime coverage provides protection for claims of theft asserted by clients or customers while your employees are working on their premises or have access to computer networks. Protection for "theft of clients property" is particularly important for software development companies due to the fact that many developers work on site and may have access to restricted areas, work unsupervised and/or work after hours. Most clients will also request that this coverage be carried, with proof provided in the form of an insurance certificate. Much like other management liability products, crime policies can also differ in their terms, conditions and coverage provided. For example, many crime policies do not provide coverage for independent contractors unless specifically added. For software developers utilizing IC's, this exclusion could render the policy unresponsive.