A software company sells and installs a computerized fare system for a transportation authority. It also has the responsibility to regularly maintain and support the system. An overnight software upgrade results in erratic behavior of the fare system, including failure of the fare system equipment to operate. This failure results in fare system outages throughout the majority of stations that comprise the authority’s network. As a result of the system failure, many stations allow passengers transportation without proof of paying the fare. The transit authority services thousands of passengers each day, and the event causes harm to the transit authority’s reputation. The transit authority sues the software company for negligence in the performance of services, specifying damages that include:

• Lost revenues
• Extra expenses associated with the need to pay for additional staff to manage the crisis, including overtime pay to personnel
• Lost revenues associated with reputational damages caused by the event

Claims Expenses: $25,000 + Indemnity: Settled for $300,000

Scenario #1: An employee's company laptop is stolen from his home. The laptop contains private financial information of company customers. The customers sue for damages resulting from the failure to protect their private financial information. Scenario #2: An employee inadvertently downloads a destructive computer virus that spreads to other files housed on your computer network. Your client downloads information from your Web site, allowing the virus to spread to the client's computer system and resulting in widespread loss of data and a computer network shutdown. Your client sues you, contending you should have prevented transmission of the virus. The client seeks damages for the lost data and economic loss caused by the network shutdown.

A Web site development company provides creative and maintenance services for their customers’ Internet, Intranet, and Extranet activities. In the process of creating a customer’s Web site, the company develops a new corporate logo for the Web site. A third party later alleges that this corporate logo infringes upon their own trademark and misleads consumers, creating market confusion. A suit is filed by this third party for infringement of trademark

Claim Expenses: $50,000 / Indemnity Paid: $175,000

The insured is a search engine optimization company which published an article on their website that the claimant felt was slanderous and false, and so sued the insured for libel, slander and defamation. The insured has a Technology, Media & Professional Liability policy, and the coverage was triggered under three separate insurance policies. Carrier paid for a portion of all defense costs in the matter. Carrier worked closely with the other insurance carriers and defense counsel to help obtain an early dismissal on the claim.

A former city government network administrator allegedly locked access to the city’s network by resetting administrative passwords to its switches and routers. The employee refused to disclose passwords. Administrative control of the network was lost. Employee was found guilty of network tampering resulting in damages of more than $200,000.