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Combined Professional Indemnity and Product Liability Policy

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Combined Professional Indemnity and Product Liability Policy

In a software company, it is sometimes difficult, even impossible, to accurately distinguish between the product and its design. For example, in the case of computer system failure, it is difficult to diagnose whether the event was caused by poor design of software components or by integration of the new software into the client’s computers.

Due to the difficulty in diagnosing the source of failure, a unique policy has been created for the Hi-Tech sector in general and software firms in particular, combining coverage for the two types of risks mentioned above: Technology Errors and Omissions.

The Professional Indemnity Policy protects those involved in various hi-tech areas who are responsible for direct financial damage that the client or any third party may incur due to their use of software, websites, professional advice, or other technological products.

The policy is based on the performance of an “illegal act” by any of the company’s employees that cause damage to a customer or a third party, such as: Negligence, mistake, omission, lack of attention, lack of supervision, unintentional breach of contract, employee dishonesty, subcontractors, loss of documents, libel and defamation, infringement of copyright and intellectual property.

The policy covers any legal fees incurred while managing the lawsuit, following the commission of an “unlawful act”, provided that the violation does not appear in the exceptions list of the insurance policy, for example: Violation of registered patents, causing damage in bad faith, fraud, etc.

The policy provides extensive coverage and peace of mind to the company, its managers, and employees, protecting them while performing their professional duties against a claim for an act or omission that they may have committed in good faith, and, as a result, caused financial damage to any of their customers or other third parties.

While the Professional Indemnity Policy protects against claims stemming from purely financial damage, the Product Liability Policy protects against claims stemming from physical injury to the body or property. The combined policy addresses both types of claims, i.e., both types of damages: Financial and Physical.

As detailed above, the policy is based on Professional Indemnity Insurance for the hi-tech professions. It is important to note that it also provides protection in cases where the insured company’s products may cause not only financial damage but also direct physical damage following their implementation: For example, in cases where the company develops, manufactures, and supplies hardware, in addition to software, technological services or cloud computing.

A limited number of insurance companies in Israel had the foresight to advance alongside the Israeli hi-tech market and can now offer creative insurance solutions for any product or service.

We at the “Betach Toren” agency can provide broad and comprehensive solutions for more complex technological products.

These policies are extended to cover foreign lawsuits and court rulings in cases where such suits are filed abroad by clients of the insured entity.

Some insurance companies do not cover “Failure of software products or electronic products to prevent unauthorized intrusion into an electronic system or program or unauthorized use thereof.” Such an anomaly, if not corrected or annulled, effectively neuters coverage of information security. We at “Betach Toren” make sure that the anomaly is void.


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