Insuring Success: Protect technology tools via up-to-date coverages

Technology has changed the way business is conducted. Computers, faxes and the Internet will continue to change the way we communicate with each other. Another thing that has changed is insuring against property and liability losses when technology is involved.

The old way of insuring computers on a standard property form isn't the most effective strategy and the Internet has created a whole new set of liabilities for businesses. As if that weren't enough, you normally have to hire computer consultants to buy, install and train you on new equipment and software. Making sure they have the proper coverage protects your business if something should go wrong or if they're injured on your premises.

Computer hardware such as workstations, printers, scanners, faxes, etc. are most effectively insured on a computer equipment policy. This type of policy will cover damage to equipment due to electrical surges and mechanical breakdown which would not be covered on a standard property policy.

An example of this would be a hard drive crash. Also typically included is coverage for software and the extra expense associated with reloading data. In addition to proper insurance coverage, taking a back-up off premises at least weekly should be standard operating procedure.

The Internet has created new exposures for businesses. All e-commerce and e-business applications need specialized insurance coverage. Losses due to a breach of security, copyright infringement, trademark infringement, libel, slander, viruses and intellectual property are just a few of the new risks businesses accept with an Internet presence.

Another area of concern for businesses is the hiring of computer consultants to develop software, install systems or train staff on how to use and maintain computer systems. What if the software doesn't work as promised and data is damaged or lost? What if your Web site has trademark or copyright infringement on it? How about the installed equipment that works about half the time you need it?

Verifying that the consulting company you select has the proper coverage is critical. It will actually protect your business in the event something does not work as promised.

The standard coverages you should require of computer consultants include professional liability or errors and omissions insurance. This coverage will protect you if software fails to function as promised, your data is destroyed or you suffer financial harm because of something the consultant did or failed to do. Frankly, this is a critical coverage many overlook and do not require.

Other coverages you should require of a hired consultant include general liability, auto liability and workers' compensation.

In today's marketplace we usually recommend a minimum limit of $1 million. Now, here's the key: the verification of this coverage needs to come from the insurance company or broker in the form of a certificate of insurance. We always recommend you request and receive this before a contract is signed or work begins. Keep in mind that their coverage actually protects your business.

Technology is changing the way business is conducted today. It also has changed the insurance coverages a business should consider. Just as technology becomes obsolete, so, too can insurance policies. Don't rely on the old insurance policies to cover emerging technology needs, but update your policies along with your computer equipment.

(Richard Ollis is a commercial insurance specialist with Ollis & Company Insurors.)