Technology
Insurance

While Tech E&O covers claims arising from your professional services and products, cyber liability insurance covers the consequences of data breaches, cyberattacks, and digital security incidents affecting your own organization and the data you hold. For technology companies that handle sensitive client data, intellectual property, and financial information, cyber liability insurance is not optional, it is a business necessity.

Cyber liability insurance for technology companies covers first-party losses including forensic investigation costs to determine the scope and cause of a breach, notification costs to comply with state breach notification laws in Delaware, Pennsylvania, New Jersey, Maryland, and Virginia, credit monitoring and identity restoration services for affected individuals, business interruption losses during system downtime, data recovery and system restoration expenses, and cyber extortion payments (ransomware demands).

Third-party cyber liability covers defense costs and damages for claims by clients, business partners, or regulators arising from a data breach or cyber event. This includes regulatory defense and fines under state privacy laws, PCI-DSS fines and assessments for payment card data breaches, media liability for content published on your digital platforms, and claims from clients whose data was compromised while in your care.

Technology companies face a distinction that other industries do not: the overlap between Tech E&O and cyber liability. If a software defect causes a client's data breach, is that a Tech E&O claim (professional services failure) or a cyber claim (data breach)? The best practice is to carry both coverages, ideally from the same carrier on a combined policy form that eliminates gaps between the two coverages. Our appointed carriers offer combined Tech E&O and cyber liability policies that provide seamless coverage across both exposure areas.

For SaaS companies and cloud service providers, cyber liability coverage should include contingent business interruption (covering your losses when a third-party service provider you depend on suffers an outage), system failure coverage (covering losses from non-malicious system failures such as coding errors or hardware malfunctions), and technology media liability (covering claims arising from content published on your platform or website).

Directors and Officers liability insurance protects the personal assets of your company's directors, officers, and managers against claims alleging wrongful acts in their management of the company. For technology startups seeking venture capital, D&O insurance is often required by investors as a condition of funding.

D&O claims against technology companies can arise from investor lawsuits alleging mismanagement, misrepresentation of financial performance, or breach of fiduciary duty; regulatory investigations by the SEC, FTC, or state attorneys general; employment-related claims from current, former, or prospective employees; customer lawsuits alleging unfair business practices; and competitor claims alleging anticompetitive behavior.

Delaware is the incorporation state for the majority of venture-backed technology startups in the United States. Delaware's Court of Chancery, which specializes in corporate governance disputes, handles a significant volume of D&O litigation. Technology companies incorporated in Delaware but operating in Pennsylvania, New Jersey, Maryland, or elsewhere need D&O coverage that responds to claims filed in any jurisdiction.

D&O policies for technology companies typically include three coverage parts: Side A (protecting individual directors and officers when the company cannot indemnify them), Side B (reimbursing the company when it indemnifies directors and officers), and Side C (covering the company entity itself for securities claims). Startups in the pre-revenue or early-revenue stage may qualify for emerging company D&O programs offered by our appointed carriers that provide lower premiums and tailored coverage terms for companies with limited operating history.

Prominent Insurance Services helps technology startups and growth-stage companies in the Mid-Atlantic region secure appropriate D&O coverage that satisfies investor requirements, protects founding teams, and scales with the company as it grows.

Technology companies create, use, and license intellectual property constantly, from proprietary software code and algorithms to brand names, logos, and marketing content. Intellectual property disputes are common in the technology sector, and a single patent infringement, copyright violation, or trade secret claim can generate legal costs that threaten the viability of a growing company.

Intellectual property insurance for technology companies can include defensive IP coverage (protecting you when another party accuses you of infringing their patents, copyrights, trademarks, or trade secrets), offensive IP coverage (funding your pursuit of infringement claims against others who misappropriate your intellectual property), and IP indemnification coverage (covering your contractual obligation to indemnify clients against IP claims related to your products or services).

Media liability coverage, sometimes included within a Tech E&O or cyber liability policy, protects technology companies against claims of defamation, libel, slander, copyright infringement, and invasion of privacy arising from content published on your website, app, platform, or marketing materials. For SaaS companies that host user-generated content, media liability coverage is particularly important because you may be held liable for content posted by your users.

Technology companies in Delaware, Pennsylvania, New Jersey, Maryland, and Virginia that develop mobile applications, web platforms, digital marketing tools, or content management systems should carefully evaluate their intellectual property exposure and ensure their insurance program addresses both defensive and offensive IP risks. Our appointed carriers offer IP coverage through various policy forms and endorsements.

The technology industry has embraced remote work more than any other sector, with many technology companies in Delaware, Pennsylvania, New Jersey, Maryland, and Virginia operating with fully remote or hybrid workforces. Remote work creates unique insurance considerations that traditional office-based policies may not adequately address.

If employees work from other states, confirm that your workers' compensation policy covers each of those states, because each state's law determines when its own coverage is required. Injuries sustained during the course of employment, even in a home office setting, are covered by workers compensation.

Commercial property coverage for company-owned equipment used by remote employees, including laptops, monitors, and other hardware, should be addressed through your business property policy or an inland marine floater. Many standard commercial property policies limit coverage for property away from the primary business premises.

Cloud service providers face unique liability exposures when their platform outage, data loss, or security breach affects multiple clients simultaneously. Service level agreement (SLA) violations can trigger financial penalties and breach of contract claims that traditional insurance policies may not cover. Technology companies providing cloud services should carry Tech E&O and cyber liability coverage with sufficient limits to respond to aggregated claims from multiple affected clients.

Data center risks, whether your company owns physical data center infrastructure or relies on colocation facilities, include power failures, cooling system breakdowns, fire suppression system discharge, and natural disasters. Equipment breakdown coverage, business interruption with dependent property extensions, and contingent business interruption coverage are essential for technology companies with significant data center operations.

Prominent Insurance Services understands the evolving insurance needs of technology companies operating in the modern distributed work environment and helps firms throughout the Mid-Atlantic region build insurance programs that keep pace with their operations.