TechInsurance Issues Guide to Verifying Third-Party E&O Insurance to Minimize Financial Losses
Small business insurance agency publishes tips to prevent losses caused by business associate negligence.
CHICAGO, Feb. 17, 2016 /PRNewswire/ -- TechInsurance, the nation's leading online agent for small IT businesses, today published a guide to verifying Errors & Omissions Insurance for third-party business associates, including vendors and subcontractors. The move was inspired by the recent data breach reported by tax software company TaxSlayer, LLC, which saw personal information from 8,800 of its customers exposed after what it describes as problems with a third-party vendor.
According to reports from SC Magazine, TaxSlayer is providing affected customers with a year of credit monitoring, as well as $1 million in identity theft insurance. As TechInsurance points out in its guide, these services represent a substantial financial investment. With proper insurance in place, though, it's possible that TaxSlayer (or its insurance provider) could recover those costs from the unnamed vendor.
"Fewer than half of our customers who work with subcontractors have formal contracts in place," said TechInsurance CEO Ted Devine. "When a mishap like this occurs, that leaves the primary IT business exposed to tremendous liability, even if they were taking all the necessary precautions." He added that any contract with a third party (vendor, subcontractor, or associate) should include requirements for liability insurance to ensure that a third party's mistake doesn't end up translating to high costs for the primary business.
Devine acknowledged that the concepts behind liability for errors like allowing data breaches are complex. To help simplify those concepts for IT professionals and the owners of small tech businesses, TechInsurance published its guide, which clarifies…
- When IT businesses might work with third parties.
- How liability is spread among parties when something goes wrong.
- How to request and verify proof of insurance from third-party partners.
- How proper insurance coverage can minimize liability exposure and cost for IT businesses.
The complete guide is available here, on the TechInsurance blog: http://www.techinsurance.com/blog/how-to-verify-that-third-parties-have-enough-eo-insurance-to-prevent-your-financial-loss.
About TechInsurance
TechInsurance is the nation's leading online insurance agent for small IT businesses. It offers General Liability Insurance and Errors & Omissions Insurance, as well as educational resources for IT professionals and their clients.
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SOURCE TechInsurance
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