| What is insurance? | | | | management, hardware networking, web design and |
| The importance of insurance is felt in every sphere | | | | development and internet services.. Companies |
| of life. Life involves risk and while it is often | | | | providing internet services can also be subject to |
| unavoidable, you can certainly take steps to minimize | | | | substantial claims resulting from allegations of |
| its effects. Many individuals opt to buy insurance to | | | | copyright and trademark infringement or the effects |
| protect their needs. Insurance is a contract between | | | | of computer viruses. Web designers may |
| an insured and the insurer where the latter agrees to | | | | inadvertently use copyright protected materials while |
| compensate the former against potential future | | | | conducting their professional services which may |
| losses upon payment of premiums. | | | | result in substantial fines and penalties.. |
| Who needs Information Technology (IT) insurance? | | | | General Liability Insurance |
| Information technology services involve the provision | | | | The General Liability section of an IT insurance policy |
| of both products and advice and yet the purchase of | | | | ensures the company's physical assets and equipment |
| appropriate insurance is usually the last decision a | | | | are covered, in addition to providing cover for any |
| business will make. Typical IT insurance protects the | | | | product damage that a third party may suffer as a |
| firms from claims arising out of professional | | | | result of the company's professional services. The |
| negligence or failure to perform professional duties. | | | | insurer provides protection against fire, theft, flood |
| IT insurance firms also covers errors and omissions | | | | and accidental damage. General liability insurance does |
| that result in loss or client data, system failure, claims | | | | not cover damages incurred as a result of mechanical |
| of non-performance or careless overselling of | | | | failure, virus attacks or equipment left behind in public |
| services. | | | | transport or public places. If equipment is stolen, or |
| Professional Liability Insurance | | | | the damage is beyond economic repair, the insurer |
| The basic idea behind professional liability insurance is | | | | may consider providing the insured with replacement |
| that it provides protection against Claims arising from | | | | equipment. |
| third party loss i.e. settlement is not made to the | | | | Note |
| Insured, but to the third party who has suffered the | | | | However, it is important to note that most |
| loss. Any act, error or omission that results in a direct | | | | Information Technology liability policies are written on |
| financial loss to a third party client may result in | | | | a 'claims made basis'. This means that you must have |
| allegations of negligence against the company which | | | | an IT insurance policy in place at the time a Claim is |
| can result in both financial loss and also damage to | | | | made against you, rather than the time the alleged |
| reputation and good will. In the event of a Claim, | | | | act, error or omission is committed. Therefore, the |
| some insurers also agree to pay defence costs as | | | | policy in place at the time a Claim is made against |
| well as any settlement amounts up to the limit of | | | | you is the policy that will respond to that Claim, |
| indemnity taken under the policy. | | | | rather than a policy in place at the time of the alleged |
| The provision of information technology services | | | | act, error or omission. |
| includes computer consultancy, database | | | | |