What is E & O Policy for Software Industry?
Basically, it is a Liability Package Policy designed especially for Software/IT/ITes
Industry to provide protection against all possible liability eventualities. Information
and network technology companies are facing greater risks than ever before - especially
when it comes to product and service performance. dotched orders… payroll delays…
foul-ups in the processing of records… losses of data… failures in delivery… all
potentially caused by products or projects that have gone wrong. Getting what's
wrong made right means huge expenses and business distractions to project owners,
and they are increasingly turning to the courts for remeby. This is Claims Made
Policy covering the Legal Liability only.
What are its benefits?
Since Software Companies deal with outside India clientele; including those of from
developed countries like USA, UK, Japan etc where awareness level is much higher,
necessity of this Insurance is more for these companies. And with increasing development
even in India, our awareness level in coming days will be much more; thus making
this Policy simply a NECESSITY.
Consider the following scenarios: A Mobile Service Provider company sues for lost
revenue and expenses to recover billing files for mobile customers that were deleted
by their software vendor who was updating the system. INT Errors and Omissions for
Technology Company Policy responds to the suit settlement of INR27,50,000 plus defense
costs of INR150,000 under a Policy with Sum Insured of Rs. 01 Crore.
A personal computer assembly company is sued by a group of consumers in a class
action suit. The suit alleges that the company's equipment did not live up to advertised
specifications. Citing issues such as lack of speed and poor upgrabe capability,
they demand full refunds. Errors and Omissions Policy for IT/ITes/Software Companies
responds to the suit settlement of INR 11,00,000 plus defence cost of INR 88,000
under a Policy with Sum Insured of Rs. 50 Lacs.
Who it is for?
This Policy should be taken by all these Companies - Software Developers (Financial
/Accounting, Business systems, e-Commerce, Asset/Inventory Management, etc.) Hardware
designer/manufacturer/importer, Telecommunication service provider, Data communication
service provider (ISP), Data processing/warehouse service provider, Computer/IT
Approximate Cost of this Insurance?
Being a Re-insurance driven Policy, the rates are as per international market and
no generic idea can be given. Furthermore, considering its complex nature, various
information inputs are needed to assess the risk and rate the premium. Very roughly,
Rs. 10,000/- to Rs.30,000/- is needed to have a Policy for Rs.01 Crs.
Claim procedure of this Insurance?
Like any other Liability Policy, it is a Claim Made Basis Policy for the legal liability
to be satisfied on behalf of the Insured under the Policy terms and conditions.
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