Do Tech Companies need to buy intellectual property coverages in their E&O policies or do their CGL policies provide enough protection?

The answer primarily depends upon the services provided by the tech company but, first, let’s look at the usual Commercial General Liability (CGL) policy. A standard CGL policy provides coverage for infringement of trade dress, copyright or slogan if the infringement occurs in the insured’s advertisement. A CGL policy also contemplates coverage for the use of another’s advertising idea in an advertisement. Further, a CGL policy does consider websites as an advertisement but only protects that portion of the website that functions as a means for promoting the insured’s products and services to attract clients. So, with these CGL protections, a tech company with intellectual property (IP) exposures limited to advertising activities, may not require IP protection in its E&O policy.

 

But if a tech company has IP exposures outside of advertisements, then the limited protections afforded by the CGL policy may not suffice. For example, if the tech company develops software code, a CGL policy would not address claims for copyright infringement claims arising out of that code. Additionally, if the tech company publishes a byline in an industry trade magazine or contributes material to an industry guide or manual, those activities are not likely to be considered an advertisement under a CGL policy. Therefore, any copyright infringement claims arising from the content could not be covered under the CGL policy. And they might not be covered by all E&O policies either unless the definition of technology services is designed to include it. Further, a CGL policy is not designed to provide trademark infringement coverage or patent or trade secret protection.

 

In the current marketplace, there are numerous markets offering intellectual property protections (although patent and trade secret infringement coverages are difficult to find) in their standard forms. But there are some markets that either continue to offer just a straight E&O product or offer to strip down their base form for a reduced premium so that only the basic errors and omissions protection remains. Generally, the minimum premiums for straight E&O can be as low as $750 and the minimum premiums for a tech professional policy with E&O and intellectual property considerations of copyright and trademark infringement can start at about $1,200. For more about CGL policies, read Advertising Injury and Personal Injury Gap.