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3 reasons to take your technology insurance more seriously

Being at the forefront of innovation, technology businesses can be exposed to risks that their insurer may not even cover full stop, let alone in include in their actual policy.

Written by Paul Brown on 1st April 2015

3 reasons to take your technology insurance more seriously

Being at the forefront of innovation, technology businesses can be exposed to risks that their insurer may not even cover full stop, let alone in include in their actual policy.
Whether you’re in the hardware or software sectors, your technology insurance is vital, and here are three thought-provoking case studies that may just make you think more seriously about your insurance…

Legal costs and liquidation
An IT company specialising in providing remote support service for large blue chip organisations was recommend to take professional indemnity insurance by Franklands to cover potential disputes between them and their clients.

The IT Company believed that the contracts and relationship they had with their clients were so good that they would not require this insurance and declined the option to purchase it.

One of the large blue chip organisations took legal action against them for breach of contract, and although they had not actually made an error, the blue chip organisation were relentless with their accusations and due to the Legal Costs of trying to fight the large organisation, within 7 months the company had gone bankrupt.  

Trading abroad safely

A  global provider of fleet management solutions, is one of the many companies to benefit from Franklands’ expertise in the technology sector. The company originally approached Franklands to assess its existing coverage and determine if the current arrangement was fit for purpose and provided relevant and efficient cover.

Franklands identified that whilst the existing policy did provide protection in respect of assets, it did not provide adequate cover for liability risks to cater for the full extent of the company’s business activities. The policy excluded significant areas such as any manual work away from the premises including whilst temporarily overseas. 

To streamline the insurance programme and obtain a standard uniform cover for the company, Franklands recommended a Global Insurance Programme, incorporating overseas trading companies, with a common renewal date.

Franklands also extended the UK policy to include public/products Liability in Ireland and Belgium, whilst maintaining local public/products Liability policies in USA and Canada.

Small print matters
Many technology companies are purchasing professional indemnity cover on a rolling basis believing that accepting their insurer’s renewal terms each year keeps them covered. Unexpectedly rapid growth can breach an insurer’s small print and they need to know if your turnover has increased and updates must be furnished to the insurer at renewal so adjustments can be made to the policy.

Franklands has also seen examples of where new contracts in North America have been agreed mid-term where technology companies thought they were automatically covered. This is not the case, cover in the USA is excluded unless specifically agreed with the insurer and even then some insurers would restrict cover to action in UK courts.

To find out more about technology insurance, download our free guide Protecting Your Technology Business here.

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