|Lets be honest, we are
very lucky in Midwest to have a less litigious society than in
most parts of the country. However, most of my clients do business
outside the State of Iowa. The last time you want to know you might
not have the right coverage for your firm is in the middle of a big
claim! Here are some of the recent losses we have seen in the IT
A web site developer provided administration and upkeep of a large
manufacturer’s customer records. The database included customer
names, order history and their billing/accounts receivable information.
Do to an employee mistake by the developer, the billing and accounts
receivable data was destroyed. To make matters worse, the wed site
developer had not backed up the database in over a month.
Defense Cost Paid: $150,000
“State of Security”
A web site firm is sued by a customer claiming they were sold
a defective system with inadequate security protections. The
customer claims the faulty system allowed individuals to access
their personal information of all of their frequent fliers and,
as a result, they incurred charges associated with identity theft
and lost consumers.
“Did We Give Up When the German’s
Bombed Pearl Harbor?”
Even if your products performed as anticipated, your customers
knowledge of your product may not agree.
A software company was
sued by a customer after the client used their construction cost estimator.
The software itself was found to have functioned perfectly. The error was
on the part of the user who later underbid a work project. The customer eventually
dropped the case, but only after considerable legal expenses
were incurred by the software company.
Damages Paid: $0
Defense Cost Paid: $175,000
One developer allowed a client to utilize their own credit card
machine to process online orders, rather than using a third party
vendor. In order to accomplish this, the web provider had the
order e-mailed from the web site directly to the vendor. However,
there was a copy of the e-mail stored on the clients web server
with customer name, address and credit card number…aka…an
identity theft jackpot. The system had a security breach, and the
client had to inform all of their past customers their credit card
data was in the “open” and should be changed immediately.
Although there was no tangible damage to the client, they sued
over the inconvenience and intangible damages done to their reputation
because of the breach of security.
Damages Paid: $785,000
Defense Cost Paid: $90,000