Russell Bond & Co., Inc. June 2015  
 
Do You Need Privacy Insurance or
Technology E&O?


Image courtesy of Stuart Miles at FreeDigitalPhotos.net

Privacy insurance and technology professional are similar yet very different.  Both types of insurance are relatively new and the terms are often interchanged creating a significant potential for gaps in coverage.

Privacy Insurance covers the key elements of loss caused by both electronic and non electronic data breaches including notification/remediation/regulatory response; liability claim settlement and defense costs; with options to include business interruption/extra expense losses and theft of property.

Technology E&O Insurance covers the insured's liability to its clients/customers for errors and omissions in delivering technology products and services and can include the privacy / security exposure.

To differentiate,
users of technology products and services should purchase Privacy Insurance. Whereas sellers of technology products and services need Technology Professional coverage.

 

Privacy Insurance can be purchased either dove-tailed with the technology product or on a stand alone basis.  A service providers data breach risk can arise from many areas:

·      Failure to prevent a breach of client’s data;  a third party exposure typically protected under a technology product.

·    Breach of their own data would not be covered under Technology professional and is a first party coverage.  This exposure needs to be protected under a privacy/security product

·     Breach of a client’s data while in the technology providers CCC; through a network breach; lost laptop, etc. would fall under both

 

Coverage for liability arising out of design and manufacturing of technology related products, creation and implementation of software and related services is big business, and are typically not covered under “standard” type insurance policies (i.e. GL).  Technology E&O can be purchased for a wide variety of operations including consultants, systems integrators, application service providers, internet service providers, internet retailers, cloud services providers, network electronics manufacturers, medical technology, telecom companies, etc.  The coverages are by no means standard and vary from situation to situation. 

 

The demands by clients before contracting with a service provider continues to drive a lot of the requests for these coverages.  Clients want proof that their vendors are properly covered by either a technology product or privacy & security product.  Many, if not most service providers utilize the use of independent contractors.  It is important to review the coverages to be sure that the coverage is provided for the work of the independent contractor while working on the insured’s behalf.  Most IC’s do not carry their own insurance. Also of utmost importance is the definition of services provided.  Carrier’s handle this in different ways:

·    A specific definition of the products/services provided – this can be dangerous if there is a change in the services offered during the policy period that is not addressed on the declaration page

·      The definition section of the policy defines activities that are covered; this is usually very broad and encompassing so in my option is the better option.

 

With all the variations in coverage needs, coverage forms and exposures, how are you to be sure you are providing your client with the correct coverage?  That’s why I’m here!

   
Having specialized in Professional /Management Liability coverage for over 25 years I have access to all the leading markets and know the ins and outs of each form.  Coverage summaries and reviews are available to you.

800-333-7226
Tonya Hollederer
Tonya Hollederer
, RPLU, ASLI, ext. 133
Vice President / Senior Broker
thollederer@RussellBond.com

 

65 Years
1950 - 2015 
866 Ellicott Square Bldg.  |  295 Main Street  |  Buffalo  |  NY  |  14203
1670 Whitehorse - Hamilton Square Road  |  Hamilton  |  NJ  |  08690
Hampton Ponds Plaza # 12 |  1029 North Road  |  Westfield  |  MA  |  01085
800.333.7226  |  www.RussellBond.com  |  Fax: 800.677.6779
Trusted since 1950