INTegrity by Chubb SM. Errors & Omissions Liability Insurance for Information and Network Technology Companies

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1 INTegrity by Chubb SM Errors & Omissions Liability Insurance for Information and Network Technology Companies

2 Will your company be the next target of an E&O lawsuit? The stakes in technology errors and omissions (E&O) liability claims are high. The news is filled with stories in which information and network technology firms have been sued by their customers or other third parties. In recent years, it is estimated that U.S. companies and government agencies have canceled or contested technology projects valued at a staggering $145 billion. Over the past few years, claims severity for technology product and project errors and omissions litigation has soared five-fold. Information and network technology companies are facing greater risks than ever especially when it comes to product and service performance. Botched orders...payroll delays...foul-ups in the processing of records...losses of data...failures in delivery...all potentially caused by products or projects that have gone wrong. Getting what s wrong made right means huge expenses and business distractions to project owners, and they are increasingly turning to the courts for remedy. Errors and omissions liability claims alleging nonperformance against information and network technology firms, including hardware, software and networking companies, are escalating. What s more, the competitive pressures and technological complexities that surround technology undertakings strongly indicate that this upward trend in litigation will continue.

3 New risks require new solutions INTegrity by Chubb SM is errors and omissions liability insurance specifically developed to meet the needs of information and network technology (INT) companies in today s litigious business climate. INTegrity by Chubb SM offers scalable protection for companies large and small, allowing you to purchase the level of insurance that meets your needs with more flexibility than the E&O insurance available from other providers. The complexity of today s INT products and projects demands specialized insurance protection. Standard general liability (GL) policies are designed to respond to claims made by third parties for bodily injury or physical injury to or loss of use of tangible property. GL policies do not respond to claims for injury to intangible property, such as software and data. For example, if a software developer s product failure causes a customer to lose valuable sales data, the developer cannot rely on its GL policy to respond because there has been no bodily injury or physical injury to or loss of use of tangible property. But, the customer is likely to sue for the cost to recreate the sales data and perhaps for lost revenues. Unfortunately, the software developer s GL insurance would not respond to such claims. Further, most GL policies contain an impaired property exclusion, which means that the policy excludes coverage for claims alleging loss of use of property caused by deficiencies in your product or service (unless the deficiencies cause physical injury to tangible property). Errors and omissions liability insurance provides essential protection to help you protect your assets when standard GL insurance does not. E&O insurance can protect you against claims for financial injury that allege your product failed or that allege you failed to perform services, causing a loss of use of tangible or intangible property to others. For instance, E&O insurance would apply when you face claims because your product caused a loss of data to others, including the loss of use of that data. It would also apply if your product or service failed, causing the loss of use of tangible property to others (without physical injury). Coverage Comparison Chart General Liability Errors & Omissions Bodily injury to third parties Yes No Damage to tangible property of Yes No third parties Loss of intangible property of third parties (e.g., software, data) No Yes Failure of product/service to meet No Yes the level of ordinary or particular purpose, resulting in loss of use of tangible or intangible property of third parties (including loss of revenue or reputation, but without physical injury)

4 Get the level of protection you need INTegrity by Chubb SM helps fill gaps in your liability insurance program. It provides E&O liability protection for some of your most perilous risks: failure of your product to perform its function and your failure to perform services within the terms of the contract. INTegrity by Chubb SM helps protect you against the legal expenses and monetary damages that can flow from an E&O lawsuit against your company. With awards for information and network technology E&O lawsuits in the millions, many companies cannot withstand the financial impact of such litigation. Small to mid-sized companies are especially at a disadvantage if the plaintiff is an adversary with substantial resources. Often, small to mid-sized companies may not be able to afford a costly E&O lawsuit, unfairly forcing them to settle. Even companies that win lawsuits often find themselves financial losers after paying exorbitant defense costs. Most E&O insurers offer a one size fits all approach. Chubb believes that your E&O insurance should fit your business needs and budget. INTegrity by Chubb SM is one of the few E&O insurance products that offers the flexibility to design your own insurance program. Choose from its Value, Standard or Premier levels of protection to meet your particular needs. Depending upon the level of E&O insurance protection you require, Chubb offers several options not available in typical E&O policies: Definition of Loss. Most E&O policies apply only to consequential damages, such as the customer s loss of income due to product failure. INTegrity by Chubb SM offers you an option to purchase additional insurance that will respond to claims from your customers for the return of amounts paid to you for your product or service. Final Acceptance Criteria. Typical E&O policies only provide protection for losses that arise after acceptance of the product or project by the customer. The insured would have to make delivery and gain acceptance from the customer before the policy would respond to the customer s claim. INTegrity by Chubb SM offers you an option to purchase additional insurance for losses realized by the customer prior to acceptance of your product or service. Privacy Violation Risk. You cannot control what vendors, subcontractors or hackers might do, but you can be sued if a deficiency in your product or service could enable others to gain unauthorized access to personal, nonpublic information, such as financial or health records, risking personal/reputational injury to others. INTegrity by Chubb SM offers you the option to purchase liability protection against claims by your customers alleging that they lost revenue because of concerns that a deficiency in your product/service could cause a violation of the privacy of third parties. The actual claim for invasion of the right of privacy would be addressed by GL insurance. Intellectual Property Infringement Risk. A deficiency in your product or service might enable others to gain unauthorized access to intellectual property, such as your customer s trade secrets. INTegrity by Chubb SM offers you the option to purchase protection against claims alleging that a deficiency in your product/service could enable others to infringe upon the intellectual property of third parties. Security Breach by Others. A deficiency in your product or service might enable others to gain unauthorized access to or use of your customer s computer or network, causing lost revenue to your customer. INTegrity by Chubb SM offers you the option to purchase protection against claims by third parties alleging lost revenue because a deficiency in your product/service could cause or has caused an unauthorized access or use by others.

5 INTegrity by Chubb SM Errors & Omissions Liability Insurance for Information and Network Technology Companies INTegrity by Chubb SM offers three levels of insurance protection Value, Standard and Premier. Choose the level of protection that meets your needs, and we ll tailor your insurance program from our broad range of options. Options Definition of Final Privacy Intellectual Security Loss Acceptance Violation Property Breach Criteria Risk Infringement by Others Risk Value Consequential Insurance limited Available Available Available loss to losses accruing after acceptance of your product/service Standard Consequential Provides insurance for Available Available Available loss losses accruing prior to acceptance of your product/service Premier Consequential loss Provides insurance for Available Available Available and the return of losses accruing prior amounts paid for your to acceptance of your product/service product/service

6 Chubb is dedicated and knowledgeable You live in a world that changes rapidly where innovation is an imperative and not some lofty goal. We understand your world. Chubb s dedicated E&O underwriting professionals have the expertise to help you develop an insurance program that provides state-of-the-art protection, supported by world-class claim and loss control services. Chubb has been providing insurance to high-tech companies for more than 20 years. We specialize in technology risks and have dedicated resources to keep abreast of the rapid changes in products and services. Our technology E&O underwriters and loss control and claim professionals have years of experience and the knowledge base to support your insurance needs. Chubb s E&O claim professionals are fully versed in the issues surrounding this type of litigation and have the expertise to help properly manage claims to a satisfactory outcome. If you conduct business across borders, then you need to consider the implications of an E&O lawsuit in a foreign country. With more than 130 offices in 31 countries, Chubb has the underwriting and claims infrastructure to handle these risks. The claim and legal professionals in our worldwide network understand local laws and can help reduce the severity of claims, while promoting efficiencies in settlements. Don t become a statistic From designing a customized network for a financial services firm to developing inventory control software for an automotive parts distributor to building an Internet portal, information and network technology firms are increasingly challenged to meet their customers needs on time, on budget and within performance standards. Complex technology products and projects have volatile financial risks liability risks that could put you out of business. Don t let your company become a losing E&O statistic. INTegrity by Chubb SM is offered as part of Chubb s suite of integrated liability products for information and network technology companies, including General Liability and Umbrella insurance. To learn more about INTegrity by Chubb SM and how it can protect you from the financial consequences of an E&O lawsuit, contact your agent, broker or local Chubb underwriter. Chubb refers to the member insurers of the Chubb Group of Insurance Companies: Federal Insurance Company, Great Northern Insurance Company, Northwestern Pacific Indemnity, Pacific Indemnity Company, Texas Pacific Indemnity Company, Vigilant Insurance Company, Chubb Indemnity Insurance Company, Chubb Insurance Company of New Jersey, Chubb National Insurance Company. Not all insurers do business in all jurisdictions. This literature is descriptive only. Actual coverage is subject to the language of the policies as issued. Chubb Group of Insurance Companies Warren, New Jersey Form (Ed. 6/02)