Claims examples: IT industry

In my business, I run across professional liability insurance daily and one of the most common comments i get is from IT industry personnel who are forced to obtain much needed errors and omissions coverage contractually is, “i have been doing this for “x” years and I’ve never had any issues or been asked for this.

In it’s quarterly news blast, Encon Insurance, a leading professional liability provider in Ontario gave some really great claims examples which I list here:


Example of Privacy Breach Liability:

– The firewall of an online sales company was disabled to allow access to a third party supplier. A hacker took advantage of this vulnerability and attacked the database then obtained the credit card info on the system and used them fraudulently. The credit card holders sued the on-line seller and the IT company – damages claimed were over $200,000

Errors and Omission Claim Example – Information Technology

– A developer was hired by a professional firm to develop and implement conflict check software. A few months later after the implementation was completed, there was a glitch in the code and backup didn’t work. The developer had failed to deliver the product according to specs. The professional firm called it negligence and claimed damages of more that $1,000,000 – excluding defense costs.


Computer Network Security and Lost Data:

РA  manufacturer hired and IT company to implement an on-line payment system for their clients. After the implementation, a cyber attack occurred against the system and it was shut down for 5 1/2 days. The manufacturer sued the IT company for the developers negligence and claimed damages for their data loss as well as expenses related to sourcing and fixing the breach.

As you can see, claims in this industry are very real and very expensive to solve. The age of ¬†” It’s never going to happen to me” is long gone.

As an IT professional, you have specialized training and consequently special responsibility. Just because you cannot see the risk, doesn’t mean that it isn’t there. Like that error message in the code, you cannot immediately see it but you know that it is there.

Protect yourself, your assets and your career.


*** All examples courtesy of The Encon Group article to brokers entitled, “Beware the Service Agreement – Part 1”

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