Old Republic International Corporation announced that it is forming a new underwriting subsidiary to provide Cyber and Technology Errors and Omission (E&O) insurance products. The new company, Old Republic Cyber, Inc., will focus on providing specialized Cyber- and Technology-related coverage and will be led by CJ Pruzinsky as President and Kevin McGowan as Executive Vice President and Chief Underwriting Officer.
Old Republic Cyber will be the seventh new specialty company that Old Republic has launched in the last nine years, adding further diversification, depth, and talent to the Old Republic General Insurance Group.
Technology errors and omissions (tech E&O) coverage can help organizations manage these risks.
What is tech E&O insurance?
Tech E&O insurance covers damages, legal fees and other ancillary costs resulting from third-party claims alleging the failure — in other words, error or omission — of an organization’s technology product and/or services. A good example of a technology services claim would be one where a technology vendor negligently migrates data from an old system to a new one and damages or destroys the data.
Tech E&O insurers define the scope of coverage for technology services and products utilizing two different approaches:
The first, and most common, approach is to include specific definitions in the policy. “Technology products” typically include computer hardware and software and telecommunications equipment. “Technology services” are generally defined as services related to the use of technology products, information technology and security, including data security, maintenance, repair, support, training, data storage, data processing and related consulting.
The second method is for a policy to list the services and products that a company provides.
It is not unusual for policies to take a hybrid approach. Both approaches have advantages and disadvantages, so it is important for a policyholder to work with its broker to ensure its policy language matches the exposures it wishes to address.
Tech E&O policies can be, and often are, customized to reflect the products and services an insured organization offers. It is essential to ensure that the scope of coverage includes all of an organization’s technology products and services.
Tech E&O vs. Cyber
Tech E&O coverage should not be confused with cyber liability coverage.
Many companies structure their coverage so that tech E&O and cyber coverages are in one policy. But it’s important to recognize that the tech E&O portion of such a policy covers the liability arising from a company’s failure to provide professional services and/or products. The cyber portion addresses losses such as ransom payments, restoration of the policyholder’s computer system and business interruption as well as liability for privacy and system security violations.
This differentiation between the two products is particularly important for organizations that would not be considered to be technology companies but nevertheless offer technology products or services. It’s not unheard of for an organization to mistakenly believe that a cyber policy covering many types of computer-related exposures sufficiently addresses exposures related to technology products and services.
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