Technology & Digital Business Insurance
A technology business selling a product rather than a project has an accumulation problem. A single product defect can affect multiple customers simultaneously, one outage affects all of them at once, and one breach exposes every record on the platform. The exposure is not the size of the largest customer; it is the size of the customer base.
That changes how the cover has to be built. A consultancy's claims arrive one at a time; a product business can face a hundred related claims from a single release, which makes the aggregate limit and the aggregation wording more important than the per claim figure.
Growth stage businesses carry exposures beyond the product. Investors bring board seats, reporting obligations and directors' liability. Employees bring employment claims at exactly the point a company is scaling fastest. Intellectual property is often the asset the valuation rests on, and defending it is expensive regardless of whether the business ultimately succeeds in defending the allegation.
We can advise technology and digital businesses on combined technology liability, cyber cover, directors and officers and the intellectual property exposure that comes with a product.
Common claims and risk exposures
The exposures that produce claims in this trade, rather than a generic list.
Accumulation across the customer base
The defining feature. A defect, an outage or a breach affects every customer at once, so the aggregate limit and how the policy aggregates related claims matter more than the per claim limit does.
Platform outage
Downtime that stops customers trading. Their loss is their revenue, multiplied by however many of them were affected, and service credits in the terms of service sit on top as a separate contractual cost.
Data breach at platform scale
A platform holds every customer's records in one place. A breach is a notifiable event across the whole base, with regulatory exposure, customer claims and reputational damage arriving together.
Intellectual property disputes
Claims that the product infringes a patent, a trade mark or copyright, or that a departing founder or employee took code. Defence costs are substantial regardless of the merits, and the dispute can threaten the asset the company is built on.
Investor and board exposure
Once outside investment arrives there are directors with personal liability, reporting obligations and the possibility of a claim from investors about what they were told. That is a directors and officers exposure, not a technology one.
The cover we arrange
We arrange professional indemnity and related insurance around the services you provide, the clients you work with and the contractual requirements you face. The appropriate cover and limits will depend on your individual activities and the terms available from insurers.
Technology liability, combined
Professional indemnity and cyber written together, which avoids the argument between two insurers about whether an event was a failure of your work or an attack on your systems.
- Professional indemnity and cyber in one
- One insurer, one claims route
- Aggregate limit sized to the base
- Aggregation wording matters
Cyber and data breach
Breach response, forensics, notification, extortion and your own business interruption. On a platform business the notification cost alone can be significant simply because of the number of records.
- Breach response and forensics
- Notification across the customer base
- Ransomware and extortion
- Your own business interruption
Intellectual property
Defence of infringement allegations against the product, and cover for the cost of responding. Pursuing your own rights is usually a separate product rather than part of the liability cover.
- Defence of infringement claims
- Patent, trade mark and copyright
- Employee and founder disputes
- Enforcement is separate cover
Directors and officers
Personal liability of directors, which becomes a live question as soon as there are outside investors, a board and reporting obligations. Also answers investigation and regulatory costs.
- Personal liability of directors
- Investor claims
- Investigation costs
- Often an investor requirement
Employment practices and crime
Employment claims during rapid scaling, and theft or fraud by employees with system access. Both are common in fast growing businesses and neither is a technology cover.
- Employment practices claims
- Theft by employees
- Payment fraud and social engineering
- Separate from the liability cover
What an underwriter will ask
Having these to hand shortens the process considerably, and usually improves the terms.
- What the product does, and whether it is business or consumer facing
- Number of customers and end users, and the volume of records held
- Whether payment card, health or financial data is processed, and by whom
- Annual recurring revenue and the largest customer by share of it
- Hosting arrangements, and the disaster recovery and backup position
- Terms of service: liability caps, service levels and service credits
- Funding stage, investor board seats and any reporting obligations
- Claims, breaches and near misses over the last six years
What affects the cost of your insurance?
The main factors insurers consider when assessing the premium.
Records held rather than revenue
The count and sensitivity of records on the platform is the primary rating factor for the cyber element, because notification and response costs scale with records rather than with income.
Consumer versus business customers
Consumer facing platforms bring larger numbers of data subjects and a different regulatory profile. Business platforms bring fewer but more sophisticated claimants.
Security controls
Multi factor authentication, tested backups, encryption at rest and a documented incident response plan are what the market rates in this class, and their absence is increasingly a decline rather than a loading.
Terms of service
A liability cap in your own terms, applied consistently across the customer base, is worth real money, because it limits the accumulation an insurer is taking on.
Conditions and exclusions to consider
Terms vary between insurers, so treat these as the questions to ask rather than a description of any one policy.
Unsupported or unpatched software
Cyber cover is commonly conditioned on running supported versions and applying patches within a stated period. It is the most frequent reason a claim is reduced in this class.
Guaranteed availability
An uptime figure warranted in the terms of service is a contractual promise rather than a professional duty, and the shortfall falls outside the cover.
Failure to encrypt or to follow your own policy
Where a policy requires stated controls and they were not in place, cover can be affected. Security questionnaires completed at inception are relied on at claim stage.
Fines and penalties
Regulatory fines on the business are generally uninsurable, though the cost of the investigation and the notification exercise usually is, and at scale that is the larger figure.
Common questions
Why does our aggregate limit matter more than the per claim limit?
Because a product defect does not produce one claim. It produces one claim per affected customer, all from the same release, and the aggregate limit is what the whole set draws on. Ask specifically how the policy aggregates related claims, since that determines whether the set is treated as one claim or many.
Do we need directors and officers cover at our stage?
Once you have outside investors and a board, yes, and investors often require it as a condition. It responds to personal claims against directors about how the company was run or what investors were told, which no technology policy touches.
Our hosting provider had the outage. Are we still liable?
To your customers, usually yes, because your contract is with them. Whether you can recover from the provider depends on their terms, which normally cap their liability at a fraction of your exposure. That gap is exactly why platform businesses insure outage rather than relying on supplier recourse.
Is an intellectual property claim against our product covered?
Defence of an infringement allegation is commonly included, and it is worth checking the limit, because defence costs in a patent dispute run high whatever the outcome. Enforcing your own rights against someone else is a different product and needs arranging separately.
How do I get a quote from True Risk Solutions?
Call 01304 262880 and speak to a broker, or email info@truerisksolutions.co.uk with what you do, what you need cover for and a phone number with the best time to call, and a broker will call you back. We need a phone number to quote, because the cover and the price depend on questions that are quicker to answer on a call than by email.
Speak to a specialist who understands your industry
Tell us about your business and the work you undertake, and we will come back to you with cover options built around it. Call 01304 262880, or email us with a phone number and the best time to call and a broker will ring you back.