As one of the hottest and fastest growing industries of the modern age, it’s of little surprise that the technology sector needs its own specialized insurance products.
The reality is that most technology firms are small companies or start-ups and don’t have the billion-dollar budgets of Facebook, Google, Amazon or Facebook. A significant claim or lawsuit could put a fledgling tech company out of business for good.
It’s for that reason that NAS Insurance launched its TechGuard product, a policy that is designed as a one-stop-shop for a tech company’s E&O insurance needs.
“If a company is building or hosting websites, developing custom software or creating mobile apps that are supposed to service a business, they face the risk of being sued if it does not work right or gets compromised,” says Jeremy Barnett, senior vice president of marketing at NAS Insurance. “If a company pays $4 million for a custom software solution and the vendor screws up the implementation and the business cannot operate for three weeks, they are going to sue you for damages. The TechGuard E&O will protect the software company in the event of that happening.”
The policy offers worldwide coverage, separate breach event and defense limits, extended reporting periods of up to three years, and BrandGuard, which covers brand loss resulting from system failures, tech E&O claims, or breach events.
The policy also includes a dependent business interruption feature, which covers a business’s loss of income and interruption expenses incurred as a result of a third-party service provider‘s system, such as a data center host, cloud service provider or web host, going down.
Regardless of the industry in which a company operates, the chances are they have some type of tech exposure.
“Whether you are selling shoes or pet food or you’re an architect or engineer, you are in a software business because you use it to run your enterprise every day,” Barnett says. “In some way or other, there is some tech risk in every company, and the more companies rely on technology and the more technology service provider contracts they have, the more they are going to be vulnerable to a claim.”
TechGuard is proving to be particularly indispensable to early stage technology companies, which represent a high-risk category. One feature of significant importance to these companies is patent infringement defense, which provides protection should a tech company be taken to court for patent and copyright related offences.
It’s not uncommon for a technology company to roll out a new app or digital tool and then have another company say they have a patent on some piece of the tech that has been infringed, Barnett explains.
“They end up being tied up with a cease and desist order or copyright infringement, which can put a small, early stage company in real peril with legal fees,” Barnett says. “Oftentimes, the patent claims are unfounded; it is just a way to slow down your competition if you think they are doing something that is similar to you. The TechGuard Policy protects these innovative companies by paying for any legal expenses related to a patent infringement claim.”