Advised Account Executive
Tech companies are at the forefront of innovation. Tech is your USP; it’s in your industry name whether medtech, fintech or edtech; it covers artificial intelligence, virtual reality, the metaverse, software; and it reaches far into the future. But it can also be your achilles heel.
There are a myriad of unique risks and challenges facing technology companies – they could come from both inside and outside your company; they could come one at a time, or all at once. But luckily enough there are also numerous insurance solutions available to address them.
In this guide, we lay out some of the issues you might face and how insurance can help cover them.
When you’re handling client funds, you’re bound by process and regulation, but still, mistakes can happen. You’re only human, so if you’re stretched or your processes break, you could find yourself in hot water.
Should this happen and a client suffers – or claims to suffer – a financial loss as a result of your work, professional indemnity (PI) insurance can cover your legal expenses and compensation costs.
This loss could come in the shape of erroneous advice or negligent content. PI covers you against this, and other actions the client might take, such as defamation or product disparagement. Professional indemnity can also be called errors and omissions insurance – they are different names for the same type of cover. Errors and omissions insurance is a term that's more widely used in the US, while professional indemnity insurance is more common in the UK, but you'll often see 'errors' and 'omissions' referenced in your professional indemnity policy.
When you’re on the cutting edge of tech, you need to protect your ideas and the time you’ve put in developing your products. Patents and intellectual property rights are vital, valuable assets to many different types of tech companies – including fintech and medtech – and ring fencing them through intellectual property (IP) insurance can be key to your businesses success.
There have been cases, however, where companies open source their tech to allow for a wider, humanitarian benefit, as Moderna did with their mRNA covid vaccine. Search engine Mozilla Firefox have also open sourced their code, as have the operating system Linux.
Should you opt against open sourcing, IP insurance can cover you should you need to defend an intellectual property lawsuit, as well as if you need to pursue one if someone has stolen your ideas and patents.
Chasing the bounty
We’ve all received spam emails telling us we’ve inherited millions, or had an email from a “coworker” asking us to give them company bank details, but sometimes scammers and hackers can be more devious and less obvious.
When you’re storing and handling sensitive information – like patient data or client money – it’s important to ensure these can be kept safe. Cyber attacks and data breaches are some of the greatest risks facing tech companies, with reputational damage and financial losses at stake.
There has been a spate of cyber attacks in 2023 alone, from British Airways, Royal Mail and the BBC. And it’s not just large corporations facing off with hackers – 46% of all breaches impact businesses with less than 1,000 employees.
Cyber insurance can protect businesses against breach of data protection laws – where they are insurable by law – liability for handling data, extortion and system rectification costs as well as PR expenses and financial loss due to system downtime.
When a data breach occurs, there will be many things going through your head. One of the biggest considerations will be whether the third-party data you hold – like sensitive client data – is safe. When working with client data in any capacity, tech companies can be vulnerable – and as we’ve mentioned, can suffer reputational and financial damage should this information get compromised.
That’s where cyber liability insurance comes in. This cover – which is also known as privacy liability, or network liability or third-party cyber cover – goes hand in hand with professional indemnity and cyber insurance. If there is a cyber breach, you’d be liable for any loss of data, extortion and data protection of a third party’s data, something that this insurance is built to cover.
So how does this differ from a cyber insurance policy? Cyber liability is designed to cover the cost of lawsuits filed by clients affected by a breach, including legal fees, settlement costs and fines you may have to pay. Cyber insurance can cover the cost of a data breach or hack on the company that carries the policy, ensuring you’re covered for reputational damage and downtime costs.
This content has been created for general information purposes and should not be taken as formal advice. Read our full disclaimer.
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- 07 December 20235 minute read
Ever wondered what intellectual property is? Want to know how intellectual property insurance can help protect your business? Then read this handy guide.