Technology E&O
Tech E&O coverage is also referred to as Information Privacy Protection or Cyber liability. Tech E&O insurance has many parts for the coverage of the various vulnerabilities of systems and data bases. Its primary purpose is to cover an organization when breaches of computer security occur. It can pay for damages caused by attacks from outside the company or inadvertent or deliberate insecurity within the company.
There are many types of coverage available, from inexpensive endorsements that give very little protection to very broad policies that cover every conceivable type of incident that can compromise security. These policies pay for damages, recovery and even the PR fallout of an attack.
According to a recent survey, about 70% of the companies in the U.S. have no or weak security. No matter the strength of the security that is in place, professional hackers can, and do, penetrate systems and data bases and steal confidential and privacy information. Major corporations, with extensive "state of the art" security, were hacked into and confidential privacy or other proprietary information was stolen.
Here is an example of a Federal Trade Commission action against Caremark Pharmacies due to a security breach:
Cause of Security Breach: Inside the company, a mistake.
Incident: Boxes of confidential information thrown into a dumpster
Investigation findings: Failure to protect confidential information, false advertising
Actions Coordinated: Dual settlement, joint investigations by FTC and HHS
- Fine - $2.25 million
- Practices put in place for disposal, handling and monitoring of privacy information
Was Caremark covered for these actions by Tech E&O Insurance? I don't know. If they had been covered, would the insurance have paid for the above actions?
Definitely.
Reports of breaches of security have risen to over 600% in the first 6 months of this year. We get daily reports of various known security breaches.
Contact us for a summary of these. Tech E&O is not intended to make up for weak or no security. Insurers require that some security measures have been taken before they will issue a policy.
You can call us at (818) 541-7900 or email us at info@mcpheeassociates.com