TechInsurance Issues Warning: Trustwave Lawsuit Highlights New Errors & Omissions Exposure for Technology Security Providers

A new lawsuit opens the possibility of liability for "failing to contain" a data breach.

Jan 20, 2016, 09:00 ET from TechInsurance

CHICAGO, Jan. 20, 2016 /PRNewswire/ -- TechInsurance, the nation's leading online insurance agency for small technology businesses, today published a guide to understanding the new liability exposure for IT security professionals introduced by the pending lawsuit Affinity Gaming v. Trustwave Holdings Inc.

The suit, filed late last year in Nevada, alleges that Trustwave, which provides cybersecurity services, failed to meet professional quality standards in a post-hack investigation and prevention of ongoing damage from the hack, which targeted Affinity. This is notable because it opens the door to similar lawsuits over issues of cybersecurity.

For IT businesses that offer cybersecurity services, the suit should be a wakeup call to verify that these services are covered by the business's Errors & Omissions Insurance policy.

"We've been saying for years that cybersecurity issues aren't going away," said Ted Devine, TechInsurance CEO. "This lawsuit makes that clearer than ever. Not only is cybersecurity here to stay, it's introducing new liability exposures for IT professionals who offer security services."

Among those exposures, Devine noted, is the possibility of E&O lawsuits brought by clients dissatisfied with the quality of an IT firm's cybersecurity services. To avoid a lawsuit alleging negligence regarding the provision of security services (like the one Trustwave is now facing), TechInsurance recommends that cybersecurity businesses take these three steps:

  1. Review your Errors & Omissions Insurance policy to see whether third-party cyber liability is covered. If it is not, call your agent to add this protection, and ask about including a retroactive date of inception.
  2. Verify the language in your client contracts. It should make explicit the scope of your services, which can help ensure a quick resolution in the event of a lawsuit.
  3. Update your client conflict resolution policy. In many cases, handling client complaints as soon as they arise can prevent lawsuits.

For those interested in details on how to manage cyber-related liability exposures, the full guide is available on the TechInsurance blog:

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