General Liability coverage is part of a business owners policy that addresses the critical liability risks of every IT company.
The General Liability policy protects against lawsuits alleging bodily injury, property damage, and damage to leased premises (Note: “personal injury” and “advertising injury” coverages are provided under the Professional Liability, Errors & Omissions policy).
Potential claims against a tech company include:
- A customer has a slip and fall accident on your premises and sues you for negligence
- You throw a cigarette in a trash can that starts a fire and causes $100,000 of damage to the landlord’s building
- Your programming or code that directs a piece of machinery malfunctions, resulting in bodily injury or property damage to a third party
- You make a disparaging remark about a competitor and you are sued for slander
General Liability insurance coverage for small IT companies
All tech companies should carry this policy as a necessity that is available at a very low price. Typically, a Business Owners policy, which includes both General Liability and Property insurance, costs $500 for most small tech companies.
The following optional coverages can be added to your policy for an additional premium charge:
- Non-Owned/Hired Auto Liability ($225)
- Data Breach (add 15%).
Non-Owned Auto Liability protects your company if it is “shotgunned” into a lawsuit involving a vehicle owned by one of your employees if he or she was using it for company business. Hired Auto Liability protects your company in the event of a lawsuit arising out of an accident inf a leased or rental vehicle by one of your employees while on company business.
Hired Car Physical Damage provides your company with coverage similar to collision and comprehensive in the event that a vehicle you rent or lease is damaged.
Employee Benefits Errors & Omissions provides protection if you make an administrative error that results in an employee not being able to collect on an employee benefit. For example a new employee that is never added to the plan or maternity coverage is not added.
Data Breach provides important protection from emerging risks. IT professionals have an exposure to loss as a result of data breaches from their own websites, servers, laptops, and paper files. Data breaches can be initiated by online hackers, viruses, malware, disgruntled employees, and ordinary thieves. If confidential or personally identifiable information is stolen, IT firms can be subject to various governmental regulations and civil liabilities, which can be very expensive.
Examples of personally identifiable information include a combination of full name and social security number, bank account number, credit card number, email address, driver’s license number, employment files, and patient medical history.
The following Data Breach coverages ($250,000 sublimit) can be endorsed onto your policy form for an additional premium charge of 15%:
Expenses to be incurred following a data breach
- Developing a plan to assist in response to data breach
- Forensic investigation
- Notification expenses
- Public relations expenses
- Credit monitoring expenses
- Legal defense expenses to defend in regulatory action.
Please note that a Professional Liability policy (and not Data Breach coverage) should cover your liability resulting from client data breaches if it is alleged that your negligence or wrongful act was the cause of the data breach.
Also, the General Liability coverage does not protect against the types of lawsuits that are covered by a Professional Liability policy (Errors & Omissions). It is absolutely essential that all tech companies carry Professional Liability insurance in addition to General Liability.
Common contractual requirements:
- Additional Insured: No charge as policy includes Blanket Additional Insured endorsement.
- Waiver of Subrogation: No charge. Can be added upon request.
- Primary and Noncontributory: No charge and can be added upon request.