Do I need the Cyber & Technology Services Endorsement?
It's obvious that the past few years have brought great changes to the business model of the advertising industry where one medium, the internet, has accelerated at light speed to dominate the advertising landscape. And along with it have come new risks and exposures that are much more numerous, as the medium reacts like no other.
The cyber environment is unique in that once something is published it is instantaneous and can have an unlimited audience – and more importantly, it can almost never be completely retracted.
While the insurance industry has kept pace with the changes in the advertising environment, many agencies haven't kept pace with need to add additional coverage. An estimated half of all agencies are self insuring their cyber exposure because they haven't updated their coverage. Let's say that again, they are self insuring, either knowingly or unknowingly.
Now let's explore the best way to tackle the issue and sort out the policy provisions to make sure you know what you have in your policy and what you need to purchase for your own agency's business model.
Starting at the beginning, your Basic AXIS PRO Professional Liability Policy covers:
- Creative in any media including digital/interactive
- Trademark and Copyright infringement
- Look-Alike/Sound Alike Claims
- Unfair competition or conspiracy
- Errors and Omissions for the performance of advertising services
For a complete list, see the AXIS PRO 4A's brochure below.
All the things on the list above are associated with placement of “matter” (insurance speak for your creative) in ANY media. Once you cross over from the creative side to web development or programming, you've stepped outside the basic AXIS PRO policy coverage. You now have additional exposure because you're operating in a different realm from the strictly creative.
As quick test to see if you have exposure, take a look at your staffing. Do you have programmers/developers on payroll? Are you engaging any outside contractors to do web hosting or development to fulfill a contract requirement? Don't forget those two techies in the garage you've subcontracted. If you are executing more than just creative you need the Axis Pro Cyber/Tech endorsement to protect against the exposure.
So what does the Cyber/Tech endorsement cover beyond your Basic Policy?
Cyber/Tech endorsement covers:
- E-commerce Risks including auction sites, data storage and maintenance
- Website design, programming, maintenance, hosting
- Design, programming or integration of information systems, including search engines
- Data Processing
- Licensing of computer software
- Outsourcing to vendors any of the services described above
Consider the following claim:
A company provided web site design and consulting services to a client. The parties eventually decided to end their relationship and the company sent its client a letter requesting payment of bills totaling $750,000. The client responded by alleging that the websites designed by the company had architectural and performance issues and demanded $9 million to settle its claims.
Remember that when the client approaches you for work, they don't really care if you have subcontracted web hosting, web management or any other cyber work to an outside vendor. If the suit is filed, it will be filed against you. Reliance on a subcontractor's insurance to answer your suit is a slippery slope. Review the list of coverages above and call in your Web or IT guys to assist you in pinpointing the non-creative areas, so that you may start your discussion with your broker or us.
Before you move on, don't forget to view the Security/Privacy endorsement if you're handling any client customer data. Data breaches are in the news every week and you could be pulled into a very ugly situation.
We would be happy to speak with you to help quantify your exposure. Give us a call. We specialize in lifelines.