If you are a private, public, or even a public entity, and you have a website, then you need E and O and D and O, and Tech and Privacy Breach E and O insurance. E and O insurance (Errors and Omissions Insurance) covers the service that you provide and the representations that your employees make to your customers. D and O ( Directors and Officers Insurance) protects the officers and directors as they conduct the affairs of the business. Tech and Privacy E and O covers the things you say and do on your website, and also if you have a computer security breach and clients or employee’s confidential information is stolen. Also, if you are a technology company and your technology harms another (viruses, lack of data breach protection, your system malfunctions and the client is harmed financially), Tech and Privacy E and O insurance will cover your company.

D and O (Directors and Officers Insurance) coverage protects your board members, who make decisions about the direction of the company. It also protects the manager, employees, and officers, who make decisions regarding the operation or direction of the company. Lastly, the company, the entity itself, as it is named in a suit for these types of actions is also covered.

Here are some example claims:
1. A director has a friend in the carpet business and the director recommends that the company buy carpet from his friend. The company spends three times more for what the carpet would normally cost, and the director also received a kick back from his friend. The stockholders sued for wasting company assets, self dealing et al.

2. A sales manager recruits two sales reps from a competitor, and he tells them to take the competitors client lists. The competitor sues for business interference et al.

3. A privately held business is sold, and before the sale, the owner signed a 10 year lease at an above market rental rate. The new buyer comes back and sues for non-disclosure and wasting corporate assets (the seller is only covered if he/she bought prior acts for the D and O insurance).

E and O (Errors and Omissions) – This covers your employees and other representatives for the actions they take as they deliver your product or service. It covers misrepresentations and errors, or lack of disclosure. It excludes fraud or other criminal activities.

Here are some example claims:
1. A sales representative of a technology company sells a $2 million contract and assures the client that it will work with his/her systems. The representative was wrong and the software destroys the client’s legacy systems. The customer sues for the error.

2. A medical supply company sells a new device to a hospital and forgets to let the customer know that the machine will malfunction if it is not grounded. The machine malfunctions and kills a patient. The hospital and the patient sue for wrongful death.

3. An insurance agent tells a client he/she is covered for wind damage in his/her homeowner policy. A big wind storm destroys the client’s home, and his policy clearly excludes wind damage. The agent is sued for the error.

Tech and Privacy Breach E and O insurance is a new area of insurance if you have one or all of the following: a website, client personal information, and/or employees. Anyone with a website accused of harming another’s reputation or posting copyrighted information, needs this coverage in order to be protected from lawsuits. General Liability has coverage for advertising, but it is debatable and therefore it is unlikely that you will find coverage since a website is not considered advertising. If you have Tech and Privacy Breach E and O insurance, you are covered. Also if your computer system is breached and confidential information is breached, Tech and Privacy Breach E and O insurance will cover you. The coverage will also reimburse the cost to inform all those that were breached and defend any suits.

Here are some example claims:
1. A medical group has a laptop stolen with 10,000 patient records on it. The thief sells the patients’ information to others who steal their identities and apply for credit cards in their names. The patients sue the medical group in a class action suit for the damage.

2. A technology company that makes software for airplanes has a virus and it destroys the computer systems of 50 planes. The airline sues for $20 million.

3. A flooring company uses an Elmer Thud cartoon on its website and its web designer assured them that he paid the license fee for its use. The flooring company gets lots of hits and business from its use of the image. The licensor of Elmer finds the site and sues for $1 million for multiple infringements of the copyright.
Every company should have E and O and D and O, and Tech and Privacy Breach E and O insurance. The cost of the insurance is not significant when compared to the risk.

HCP National is an E and O and D and O, and Tech and Privacy Breach E and O insurance brokerage whose home office is in California. This article is not an insurance policy. All questions of insurance coverage are determined by your insurance policy. We are also not a law firm and we do not offer any legal advice.

NOTE THE ABOVE IS A GENERAL DISCUSSION ABOUT HOW COVERAGES MAY WORK. YOUR INSURANCE POLICY AND ALL ADDENDUM ARE THE ONLY AUTHORITY OF HOW YOUR COVERAGE WORKS. DO NOT RELY ON THIS ARTICLE AS AN EXPLANATION OF YOUR COVERAGE. HAVE YOUR ATTORNEY REVIEW YOUR ENTIRE POLICY WITH YOU TO DETERMINE WHAT IS AND ISN’T COVERED.