Technology Errors and Omissions Liability Insurance
Technology Errors and Omissions insurance, also referred to as professional liability, protects IT based businesses against claims for programming errors, software performance, or the failure to perform the work as promised in a contract.
More formally explained, it protects technology companies if they are faced with the two most common forms of liability risks:
- claims for “malpractice” in which companies are sued for failing to maintain accepted standards of care as a technology professional or company, and
- breach of contract claims for failing to perform contracted services in a timely manner and within the contractual terms.
To paint a picture of an actual claim scenario, consider this:
Your design team spent numerous hours creating a website they felt met the client’s needs perfectly. But weeks after the site launched, you learn that a member of your team accidentally deleted critical content on the site. This created a liability exposure for your client who sues you for restitution. Just when you think things can’t get worse, you learn that your general liability insurance will not cover your employee’s error.
How will you pay for damages to your client – and the legal expenses related to the lawsuit? Either of the types of errors and omissions allegations outlined above can tie up company funds, personnel and focus for years; and IT based businesses are especially prone to high dollar lawsuits.
Don’t be fooled, however. Technology Errors and Omissions insurance coverage is NOT provided by a commercial general liability policy. IT consultants and companies who have general liability without professional liability (Errors or Omissions) coverage are taking a serious risk. It’s the same concept as a doctor practicing medicine without malpractice insurance.
All Types of IT Firms Need Errors and Omissions Insurance:
From massive software giants to individual consultants writing programs or servicing computers out of their homes, all are equally at risk for E&O liability suits. Here are some more examples of the types of businesses that need this coverage:
Software and computer-related services
- Prepackaged or custom software developers
- Website designers
- Computer consultants
- Systems integrators
Electronics manufacturing
- Electronic components
- Consumer electronics
- Computers
- Communications equipment
Telecommunications & connectivity services
- Long distance telecommunications carriers
- Internet/Application Service Providers
- Web site hosting
Technology Errors & Omissions insurance is a technical and specialized line of insurance. If your business is in need of this coverage, be certain the insurance agent you’re reaching out to is knowledgeable on the subject and understands ins and outs of these policy forms!
–JK
Worker Loses Part of Finger at Large Commercial Bakery
From LATimes.com:
Another employee has lost part of a finger at Bimbo Bakeries, a company with plants throughout California whose record of workplace accidents was highlighted by The L.A. Times last year. Bimbo Bakeries USA makes a number of well-known brands of breads, tortillas and pastries, including Orowheat, Tia Rosa and Entenmann’s
The company’s total number of amputations is nine since 2003!
“Nine Bimbo Bakeries workers have had parts of digits or a limb amputated since 2003 at plants across the state, where regulators have found inadequate training and machines without proper guarding.”
In an investigation last fall, the L.A. Times found that seven employees had lost parts of fingers or a limb in accidents at California plants over the last seven years. In six of those cases, investigators found that machines did not have proper guards to prevent employees from reaching in, officials said.
In October, Cal/OSHA sent its “high hazard” unit to four California Bimbo plants. Inspectors found equipment that lacked proper guarding. The division fined Bimbo $230,000, including more than $120,000 in rarely issued “willful” citations for companies that intentionally disregard safety regulations. Bimbo has appealed those charges.
Then, in January, an employee lost part of his finger in a tortilla machine that investigators later found did not have proper guards.
Inspectors cited “the willful failure of Bimbo Bakeries to guard the openings around … the tortilla production lines” and insufficient training of workers, among other things. The division recommended $123,000 more in fines, including more willful citations. (read full story here)
What Can I do to Keep My Employees Safe?
The following page provides links to numerous Occupational Safety and Health Administration (OSHA) resources and information designed specifically for smaller employers, including the free On-site Consultation Program, safety and health tools and publications, easy-to-follow guides for specific OSHA standards, and descriptions of benefits that small businesses receive from OSHA.
–JK
Lessons Learned – Week of September 19, 2010
“keep it rollin..keep it rolling.”
I’d buy from him. What about you??
All Businesses Are Vulnerable to Catastrophic Auto Liability Claims
Last month, on August 9th, a tour bus carrying Japanese sightseers from Las Vegas, NV to a national park in Utah, crashed on Interstate 15 north of Cedar City, Utah. Three were killed in the crash and 11 injured.
This photo released by the Utah Highway Patrol shows the bus at the scene of a crash north of Cedar City, Utah
The 26 year-old driver of the bus was reported to have smoked marijuana heavily for several days before falling asleep at the wheel of the tour bus when it crashed. He was charged yesterday with 10 felony counts of negligent driving under the influence, and one misdemeanor charge of having marijuana residue in his system.
To date, no charges have been filed against the bus company he was driving for. That company supplied the shuttle bus and driver to other tour operators who organized the trip.
What if this happened to your business?
You might not be in the tour bus industry, but this doesn’t mean an accident of this magnitude can’t happen to your business. Do you own commercial autos titled under your business? Have a commercial auto insurance policy in force? Or, do you simply have employees run errands to the post office, store, or to pick up your lunch? What if your employee was distracted at the wheel and veered off the road killing or injuring others? Are you certain your business is covered for these circumstances? You may want to inquire with your insurance agent NOW to confirm.
Aside from having the proper insurance coverage in force to protect your business from auto liability claims, here are some basic risk management measures you can take as a business owner to help mitigate the situation. Although, following these measures is no guarantee accidents will NOT happen.
If you have additional stories, advice, or recommendations to share, please comment!
–JK
Workers Compensation and Strip Clubs Seem To Have Something In Common
From HRMmorning.com
It’s not what you think — workers compensation cheats aren’t spending their extra dough at strip clubs. Apparently, they’re making a little extra cash on and off stage.
It appears as though one of the best places to find a workers’ compensation cheats is at the local strip clubs.
Consider the evidence:
- A Quakertown, PA, woman was arrested and charged with two
counts of insurance fraud and theft by deception after an investigation found her working as a stripper at a local gentleman’s club while receiving workers’ compensation payments for a back injury. She had received nearly $23,000 in compensation and more than $4,000 in medical expenses after she claimed to have been injured in a fall while working as a waitress at a family restaurant.
- A Frankfort, NY, man was found working as a DJ for a strip club while collecting benefits for an accident he sustained as a painter 23 years ago. He had even denied in three written statements to the New York State Insurance Fund that he had returned to work. He was arrested on felony charges of third-degree insurance fraud and fraudulent practices after bilking more than $46,000 from the system.
- An Islip, NY, man has been charged with insurance fraud after police
found him working as a bouncer at an all-nude club while collecting worker’s compensation payments. Officials claim he defrauded the town of Islip, where he used to work as a mechanic, out of more than $17,000.
–JK
Lessons Learned – Week of September 12, 2010
How to dismantle and rebuild a Jeep in under 4 minutes:
Wow
Eyes On NFL Sexual Harassment Controversy
This week in the news, the National Football League is at the center of an alleged harassment controversy. Mexican TV reporter, Ines Sainz, was covering the New York Jets for TV Azteca at last Saturday’s practice. Allegedly, when she went into the team’s locker room to interview QB Mark Sanchez, who has Mexican heritage, she said she heard comments from players such as “Oh my goodness she’s here,” and “OK, I want to be Mexican.”
(cc) jrsnchzhrs/Flickr
The story is making news this week, however, Sainz said she couldn’t definitively say whether the Jets’ conduct crossed a line that would warrant discipline. Sainz noted that she did not initiate the complaints about Jets players’ behavior. She said she mostly ignored the treatment Jets players were giving her in the locker room.
Whether or not Sainz was harassed is to be determined, but this brings to light harassment issues in the workplace and how business owners can be exposed to these types of potential claims. Employment Practices Liability Insurance (EPLI) provides protection for an employer against claims made by employees, former employees, or potential employees relating to many types of employee related lawsuits including claims of sexual harassment, discrimination, wrongful termination, failure to employ or promote, etc.
Due to today’s economic times, there are significant increases in the number of employment practices liability related claims. Statistics show that businesses are four times more likely to face EPL claims than a fire loss of ‘slip and fall’ liability claim. Six out of ten employers have faced employment lawsuits in the past five years. The average EPL claim cost is about $163,000.
Even if a groundless or fraudulent claim is brought against your business, EPLI policies will reimburse your company against the costs of defending a lawsuit in court.
No business is invisible to Employment Practices Liability claims, not even professional football franchises. Is your business protected?
–JK
Liquor Liability Insurance Basics
“Drinking makes such fools of people, and people are such fools to begin with that it’s compounding a felony.” -Robert Benchley
You see it at sporting events, the company Christmas party, college campuses, bars, restaurants, weddings, concerts, tailgate party’s, birthdays, BBQ’s, everywhere! The list goes on. Booze is everywhere! The problem is, where there is alcohol being served or sold, there are always those who have had ten too many.
Those who get “over-served” often do dumb things which can be harmful to themselves and/or other innocent parties whom they encounter. That’s why businesses which manufacture, sell, serve, or facilitate the use or purchase of alcohol need to purchase liquor liability insurance.
Liquor liability insurance is a form of commercial insurance that protects businesses against loss or damages claimed as a result of a patron becoming intoxicated and injuring themselves or others. It provides coverage for bodily injury or property damage resulting from:
- Causing or contributing to the intoxication of any person;
- Furnishing alcoholic beverages to a person under the legal drinking age or under the influence of alcohol; or
- Violating any statute, ordinance, or regulation relating to the sale, gift, distribution, or use of alcoholic beverages.
Liquor liability is either sold as an add-on to a commercial liability policy or as a totally separate policy.
Liquor Liability laws vary by state. Some states have passed “Dram Shop Liability” laws which make it possible to hold those who serve alcohol to an intoxicated or underage customer responsible for damage or injury caused by these individuals. Most of these laws offer an injured person, such as the victim of a drunk driver, a method to sue the person who served the alcohol.
Originally, Dram Shop Liability laws were intended to apply to taverns, bars, and other establishments selling and serving alcohol. However, “social hosts” (such as those hosting a holiday party) also have some exposure to the risk of liability for serving alcohol.
When business owners host a holiday party and serve alcohol as part of the festivities, liquor liability would most likely be covered by their commercial general liability policy, but that is not a guarantee. It is best to check with your insurance agent first. Host liquor liability is a coverage under a commercial general liability insurance policy for businesses not ‘in the business of’ serving, manufacturing, distributing, selling, serving or providing alcohol.
Although damages in liquor liability lawsuits can be substantial, businesses often lack adequate liquor liability coverage. This exposes them to a substantial degree of liability. No matter how many measures a business owner takes to limit their liquor liability exposures, there’s no guarantee they won’t be dragged into a suit.
Drinking makes fools of people. Don’t allow their foolish actions ruin your business.
–JK
Lessons Learned – Week of September 5, 2010
GRENNE COUNTY, Ohio — (8/25) A 19-year-old, Brennan Eden, was driving well over 100 mph when he passed a police cruiser in the left shoulder of an interstate, striking a steel guard rail that sent his car flying into a bridge overpass. Amazingly, he survived!!
Lesson Learned: Either buy a bike or start taking the bus or something. Eden allegedly had prior legal trouble with traffic and speeding violations. According to his driving record, he was cited for failure to control after a crash last October. Then, just nine days later, records show that he was ticketed for driving 90 mph in a 65 mph zone. If he ever gets his license back, what do you think his insurance premiums would be?
Not So Fun Business Injury Facts
Businesses deal with risk everyday. Whether it be liability risks such as injuries to employees or customers, or property loss risks such as fire or theft, businesses must implement risk control and risk management procedures to protect their operations. Of course, accidents happen and this is why insurance is necessary. Here are six (not so fun) injury facts courtesy of Travelers Insurance:
- 25,000 slip and fall accidents occur daily in the U.S., accounting for 15 percent of all workplace accidents. It is also the leading injury to people on company premises.
- Back injuries account for more lost work time than any other workplace injury. Often, the source is improper lifting.
- Fires in commercial buildings cost more than $2 billion in annual property damage and loss. Lack of, or improper maintenance of sprinkler systems plays a significant role.
- Musculoskeletal disorders results in over $45 billion in loss wages and productivity costs. Organized office workstations and poor ergonomic practices are contributors.
- Adverse weather is the leading cause of vehicle accidents and fatalities. Many company drivers don’t understand the risk or how to adjust their driving behaviors.
- Falls from ladders injure over 20,000 American workers annually. Some injuries result in permanent disabilities and even fatalities. Safety starts before the ladder is even mounted.
About Me
I grew up in Fullerton, CA and graduated from Servite High School in Anaheim. I have my Bachelors degree from Loyola Marymount University in Los Angeles. I currently live in Tustin, CA.
Please contact me if you need help with any of the following lines of insurance for your business:
-Cyber / Data Breach
-Commercial Property
-Commercial General Liability
-Products Liability
-Workers Compensation
-Commercial Auto
-Umbrella/Excess Liability
-Errors & Omissions/ Professional Liability
-Employment Practices Liability
-Directors & Officers
-Life & Disability Insurance
Jimmy Kinmartin, CPCU 