What insurance should a tech professional have – General Liability or Professional Liability

Looking at the requirements for an IT bid? Sure, it includes the standard stuff, who you are experience, a registration with some system, terminations, inspection and testing, bugs, and insurance. Wait what? Yes, more and more contracts for IT projects are requiring a certificate of insurance. While this is common in other industries a certificate of insurance is relatively new for the tech industry. So normally you just call the local agent, and he gets you something, you don’t really know what and viola, a contract. The trouble is that even amongst insurance agents a request for a certificate of insurance for a tech professional is an odd request.

Often agents will issue a General Liability policy, which is entirely incorrect. Why? Because it doesn’t cover you for what you need (generally speaking… although you may also need this too if you rent or own real estate). Let’s take a look. General Liablity covers several things including the defense and settlement of accidents related to:

Premise Liability – This covers bodily injury that happens on the business premise (think a slip and fall).

Operations Liability – This covers things that happens within the operations of the business, like a painter dropping a bucket of paint on a passerby.

Products Liability – Think a manufacturer of a tool, constantly breaks injuring the user.

Completed Operations – For this one think faulty construction. You bought a home a couple of months ago, they contractor used a cracked board in a step and they step gives way and someone is injured.

Again, if you own real estate as a part of your business these things would be important, but it is designed to cover bodily injury that occurs. While some software can certainly cause bodily injury, generally speaking what these contracts are looking for is coverage financial loss because you don’t live up to the contract. This is known as a professional liability policy or a Tech E&O or Tech Malpractice policy. What does this cover?

Professional Liability – This covers the financial and consequential damages associated with your work. For example what if they client believes that you

  1. Failed to Perform as expected
  2. Made software that extremely Buggy because you were careless or just simply made errors
  3. Breached the contract or didn’t complete the project.
  4. Delay to start or delay in delivery

In these situations you’re a tech malpractice insurance policy would The defense costs associated protecting you from lawsuits as well as making the damaged party financial whole again.

Network and Security Privacy – This covers the financial and consequential damages associated with you being responsible for a data breach. This is not automatically added to the professional liability policy for those that are working on personal data.

Media Liability –This covers the financial and consequential damages associated with you being responsible for advertising or personal injury such as copyright and trademark infringement or defamation of a person or product disparagement. Like the network and security privacy coverage this can be added to the professional liability policy for those that are create content as a part of their IT contracts.

So, if you are asked to provide a certificate of insurance as a tech professional get what you need. That very well may mean you need a General Liability policy, but more likely what you need a proof of insurance stating you have tech malpractice. Start a quote for a tech malpractice insurance today!