ICT Combined Liability Insurance

Information & Communication Technology Industry

Liability Risk Exposure Issues

Organisations competing in the Information and Communication Technology (ICT) industry operate in the fastest growing industry in the world against a backdrop of ever-increasing legal and legislative change.

Increased Litigation

As every facet of our working and personal lives becomes reliant upon technology, its failure can cause critical disruptions. There is moreover a heightened social awareness of legal rights in such circumstances. The Information and Communication Industry is consequently finding itself the increasing target of litigation.

Increased Risk Exposure

Any organisation that develops, manufactures, licenses, sells, provides, advises, integrates any form of Information or Communication Technology (ICT) and related services is exposed to litigation. The failure of a product, service or incorrect advice will expose that organisation to claims.

The cost of legal representation itself, irrespective of any liability to compensate a client, can be potentially crippling to an organisation, and is seldom fully recovered even where the organisation has been found to have no liability.

In addition to the increase in litigation, the legal and legislative systems have found it difficult to keep pace with the change technology has made on our society. The result has been a number of contradicting legal rulings, which adds to the uncertainty in the application of laws and regulations governing the industry.

The Benefits of ICT Combined Liability Insurance

ICT Combined Liability Insurance provides protection for organisations against legal liability arising from the failure of their products, services and or advice in the conduct of the business. This Insurance combines and improves traditional Public and Product Liability insurance coverage to respond to the unique exposures of the ICT industry. In addition to Public and Product coverage the policy incorporates Professional Indemnity into one insurance solution for the industry.

The Insurance provides cover for compensation settlements as well as coverage for Defence Costs associated with defending legal actions.

Comprehensive Protection

The shortcomings of traditional insurance products such as Product Liability and Professional Indemnity for the ITC industry has prompted some insurers to develop a comprehensive product to meet the contemporary needs of clients. ICT Combined  Liability insurance incorporates the benefits of the traditional policies of Professional Indemnity, Public and Product Liability.

But the combined policy also caters for the specific needs of the industry by ensuring a broad definition of ICT that incorporates products, services and advice and is common to both the Professional Indemnity coverage and the Public & Products Liability coverage all within one policy. This combined insurance coverage ensures that there is certainty of protection for the unique risk exposures of the industry.

Important Coverage Features Available

Civil liability coverage for compensation and claimant’s costs and expenses in respect of any Claim first made against the Policyholder during the Policy Period including:

• Breach of Statutory Duty under Consumer Protection legislation;

• Coverage for the acts, errors or omissions of contractors and consultants;

• Breach of privacy or confidentiality in respect of ICT services;

• Joint Venture proportional liability in connection with ITC services;

Special Coverage Features available through Gallagher

• Assumption of Contractual Liability – alleged breach of contract arising directly from an indemnity or hold harmless condition of any contract in respect of ICT services;

• Indemnity for up to 5 Contractors and Consultants primary liability for claims against them when contracted to and under the direct control of the policyholder;

• Loss of Electronic Data – indemnity for costs and expenses incurred in replacing or restoring data;

• Mitigation of Loss – indemnity for costs and expenses incurred in any action taken to mitigate a loss or potential loss to minimise a claim;

• Principal’s Indemnity – subject to being noted in the policy

Assumption of Contractual Liability Claim Case Study

A major department store engaged an IT company to provide a system for their customers to purchase products over the internet. The contract stated that the contractor was required to indemnify the retailer against:

All loss, damages, claims, liability or expenses incurred by or awarded against the Principal arising directly or indirectly from:

(b)   “breaches by the contractor of this agreement and

(b) any act or omission of the contractor relating to this agreement, including negligence, or arising as a result of the performance or non-performance of the Professional Services.”

The IT system supplied didn’t function correctly. Customers couldn’t place orders and payments weren’t received. As a result, the retailer sued the IT provider for $1.2 million for breach of contract and their loss of profits.

The ‘Assumption of Contractual Liability’ cover is a special feature of the AIMS Combined Liability exclusive policy underwritten by professional risks specialists, Vero Insurance.

Donnellys is a member of the AIMS national network of insurance brokers which has developed a “best of breed” market leading ICT Combined Liability policy for the clients of AIMS brokers. We welcome your enquiry to protect your ICT business with the best available insurance policy.

ICT Combined Liability Policy Quotation

If you would like a quotation for this insurance please download and complete the interactive proposal form below and email it to us at: adelaidecbd@agj.com.au

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