• In locating this specialty insurance company for your unique technology business first requires that you match up the coverages that you are seeking along with analyzing whether or not the insurance company provides these types of coverages.
• Technology errors and omissions insurance is probably at the heart of all the coverages that you are seeking. This coverage provides protection from where almost all of your claims will probably come from. That being an error or an omission that has been made within your company of a professional nature.
• Umbrella insurance companies tend to be much larger insurance companies that have the financial ability to provide excess limits to help meet the requirements of some of your vendor contracts. Sometimes the casualty insurance company will not be the same insurance company that provides professional liability or the excess liability limits.
• A surety insurance company provides insurance for your bond requirements. The most typical bond would be a crime bond which provides coverage for theft of your vendors and clients data and or assets.
• Another coverage to locate would be workers compensation insurance companies that specialize in your industry.
• Finally, healthcare insurance companies need to be located to cover the health care needs of your employees wherever they may be located.

In evaluating the insurance company that you are going to choose there are a common elements to consider in your analysis.

• Ratings. There are several independent financial rating firms that specifically provide analysis to the insurance industry. The largest and most common rating organization that is used is called A.M. Best. They use some 20+ criteria in their analysis for the financial health of an insurance company. This is a quick way for the novice to judge the insurance company that you are considering using by quickly looking online at this rating. Of the common elements that we are listing for your review this one is the most important.
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  Industry-specific. Evaluating your carrier based upon their experience and expertise in your special industry niche is another way to help lower your total cost of insurance in the long run. Usually insurance companies that are more targeted in their coverages and policies that better pricing they tend to offer their clients.
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  Coverage specific. Having the specific coverages that you need and desire will usually be found amongst carriers that readily provide and competitively price these products. Your technology business as unique exposures within the products and services that you provide. Evaluating your carrier based upon the coverages that they provide can help prevent gaps in coverage and can provide the coverages that your vendors and or clients require.
• Geographical territory. If your products and services are nationwide and/or global wide, it is important to make sure that your carrier also has the resources to meet your needs.

Locating and evaluating the insurance company before you make your selection is a prudent and appropriate strategy to execute.

• Insurance premiums. It is normally fairly easy to add up the cost that you are paying in insurance premiums for technology errors or omissions insurance, umbrella insurance, casualty insurance, professional liability, surety insurance, workers compensation insurance, and health care insurance. The premiums for all of these coverages are usually very plain and clear on your insurance policies. This type of coverage cost will form the basis for the tracking of the total cost of risk.
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  Risk management and HR departments. Many times when businesses reach a level of the number of employees they tend to have an HR person and/or a risk management person on staff. The cost of this department in salaries and overhead and all the in direct cost must be factored into your tracking for the total cost of risk.
• Self-insured losses. These are hidden cost that can directly affect your TCOR. Some examples of these might be the deductibles that you have on all of your policies that will come into play once you present a claim, as the deductibles will be paid directly out of your cash flow. Making a management decision to retain potential losses versus insuring for them can be another hidden cost that affects your cash flow. If you choose not to ensure building, equipment, or not to have full coverage on your automobiles, these decisions if claims or losses are rise will be retained by you as the owner and you will be responsible for payment of these losses out of your cash flow.


Outsourcing services. Small to mid-size companies sometimes outsource their risk management services, their HR services, and possibly their claims tracking and payments. An analysis and assessment needs to be made by you as the business owner as to whether the cost of these outsourcing services are helping to in produce the internal profits that you desire.

These four components comprise the key elements of your total cost of risk on an annual basis. Many business owners understand the cost of their insurance premiums but failed to add in the cost of; any and all risk management and HR departments and people associated with those services; or any plan designs that have built-in self-insured elements that will negatively affect your cash flow; and finally any and all outsourcing services that are done within the risk management area must also be added into the total cost risk. Being proactive and dating deep into these direct and indirect costs will help you in budgeting and planning for the upcoming year. Failing to take into account the total cost of risk normally will cause shortfalls in your financial statement because of this oversight.

Traditional insurance policies premiums were normally based upon tangible asset values. The tech professional’s assets which are primarily intangible can be in the areas of valuable data, software, and intellectual property. Since cyber-risk and tech-risk is still an emerging industry the insurance products that are available for this industry is also in an innovative and emerging status. Unfortunately, this means there is little if any standardized terminology that can be used to compare one insurance company’s forms to another’s. Only after many more court cases will the landscape for defining tech insurance terminology within insurance contracts become more clear and concise for the average consumer.

Let us look at some of the most common insurance terminology that is used in providing insurance coverages for the tech insurance professional.

• Cyber liability. Besides the traditional bodily injury and property damage coverage that is covered under the standard general liability insurance policy, the tech professional needs enhancements for the tech specific risk.
• Cyber-property. Property that is damaged that is mainly intangible, such as websites, data, lost business from e-commerce online, and damage from viruses need broaden property enhancements to address these unique exposures.
• Media and intellectual property liability. Anything that is placed on the Internet is considered published. There can be patent infringements, copyright infringements, losses from libelous statements, all from information that is published media on the Internet via websites, e-commerce, and/or social networking.
• Technology E&O. typically this covers liability claims and losses arising out of professional products and services that the tech professional is offering to their clients. Sometimes there are can be gaps in coverage when the tech professionals own website is the culprit in causing losses for third parties.
• Intellectual property. There can be exposures from both a first party and third-party perspective. Intellectual-property normally includes claims and losses from violation of existing trademarks, copyrights, and patent infringements. Sometimes only defense only coverage is available because intellectual-property claims can sometimes be intentional in class normally there is no coverage for intentional acts. Almost all states have on the books laws that prohibit insurance companies from providing coverage for intentional acts.

Tech insurance is an emerging market of products and services for the tech professional. Because of the lack of standardization of the terminology within the insurance industry this can lead to gaps in coverages that the tech professional was not anticipating. Making sure that you purchase insurance products for your tech company from an insurance company that specializes in writing tech insurance will help you obtain the broad and appropriate coverages that you are seeking. It is also important to seek out an insurance broker who has the experience and expertise in the technology insurance so that the proper carriers and coverages are put in place on your by half. There are only about a half dozen insurance companies in the United States that specialize in writing tech insurance.