Tech Professional Indemnity Insurance
What is Professional Indemnity and Errors & Omission Insurance (PI or E&O)
You have tried and tested processes in place, you have faith in your work and your execution and you have strong relationships with your customers… sound familiar?
However, despite your best intentions and desire to deliver, at times, one of your customers may decide that the work that you delivered failed to meet their expectations. At this point, even your most loyal customer may decide to make a claim against you.
A typical Professional Indemnity claim consists of defence costs and compensatory damages. Even if you feel that you are not at fault, it could cost you tens of thousands, if not hundreds of thousands to prove this in court. To most businesses in the UK, this could be catastrophic to the financial well being of your company.
Whilst lots of businesses understand what Professional Indemnity Insurance is there for, Many Managing Directors, Chief Finance Officers and Business Owners are not always sure.
One of the main misconceptions around Technology Professional Indemnity is that it covers you if you Injure someone or damage something belonging to somebody else. Whilst there may be elements to a PI claim that does relate to a product, claims for Injury or Damage are usually picked up under a Public and Products Liability Policy. The intention of a Professional Indemnity or Errors & Omission policy is to cover a financial loss to a third party (a customer whom you have contracted to undertake some work for)
So, no one is injured. Nothing Is damaged, but someone has to pay (usually financially) to fix what your client believes you have failed to do.
What does Technology Professional Indemnity cover?
- Breach of contract (verbal or written)
- Breach of professional duty
- Intellectual Property Rights (IPR)
- Libel or Slander
- Defamation or damage to reputation
- Breach of confidentiality and privacy
- Loss or damage to documents
- Transmitting a computer virus, denial of service or malicious cyber attack
Claim Example 1
You contracted to develop some software to integrate into your clients other systems. The project was your largest project to date. The project fell behind the contracted timescales and your client filed a claim for lost profits due to the ongoing disruptions to their business. A Tech Professional Indemnity policy would support your business for claims for compensation in respect of the error, omission or negligent act.
Claim Example 2
You develop a software program for one of your clients. The intention of the software is to log data for them to use at a later date to aid their sales process. A glitch in the software meant that some vital information was being missed. Your client alleged that this cost them a large amount of revenue and sought to recover damages resulting from the failures. A Tech Professional Indemnity policy would support your business for claims for compensation in respect of the error, omission or negligent act.
Claim Example 3
You supply a component that is integrated into a communications system. Between 10,000 – 15,000 units have been supplied before a critical fault was picked up. Your client seeks damages against you.