Crowd-stuck: Weathering the Next Global IT Outage
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Friday’s widespread IT outage – affecting companies using Microsoft products – caused industries from aviation to energy to come to an abrupt halt.
Unlike AT&T’s recent data breach, this incident was allegedly not the result of a cyber attack. CrowdStrike, a widely used cybersecurity vendor, simply pushed out an update containing a bug that caused millions to see the infamous "blue screen of death."
There's a temptation to think that incidents like CrowdStrike could be covered by business insurance policies like cyber liability coverage. After all we’re talking about damage to digital infrastructure, right?
The reality is that tech companies need an array of business insurance to fully mitigate risks from IT outages. Koop specializes in providing business insurance for technology companies; we’ve outlined the types of policies businesses can adopt that would help the most when the next IT outage inevitably happens.
Technology Errors & Omissions (E&O) Insurance
While not the result of a cyberattack, CrowdStrike's recent outage could have resulted from an employee error (e.g. deploying a bug within a routine software update). That’s exactly the kind of situation E&O insurance was created to cover: professional negligence. But E&O goes beyond negligence to cover an array of situations including:
- Misrepresentation: Allegations that a company provided misleading information about their services or products.
- Errors in Documentation: Claims resulting from mistakes in reports, records, or other documentation provided to customers.
- Missed Deadlines: When a company fails to meet a critical deadline that impacts a client’s business, leading to financial loss or other damages.
The breadth of scenarios covered by Technology E&O makes acquiring it a low-cost solution to several regularly occurring risks.
Business Interruption Insurance
Today’s outage has caused businesses like airlines to temporarily suspend operations. Every minute service companies can’t operate has a financial cost that interruption insurance is designed to cover. Interruption Insurance claims typically fall into four categories:
- Lost Income: Replaces the income the business would have earned had the interruption not occurred. This is usually calculated based on past financial records and future projections.
- Operating Expenses: These include fixed costs such as rent, utilities, and payroll that the business must continue to pay even while operations are halted.
- Temporary Relocation Costs: If the business needs to move to a temporary location, the policy can cover the expenses associated with the move and operation from the new location.
- Extra Expenses: Any additional costs that the business incurs to continue operations during the interruption, such as renting equipment or outsourcing work, may also be covered.
So while business interruption can be costly, it doesn’t have to be, with policies often covering 100% of lost income and required operating expenses.
Tech E&O and business interruption are just two of the policies tech companies can benefit from when there’s a widespread IT outage. Other policies like General Liability and Product Liability are easy recommendations for companies making the cutting-edge products we use daily.
Koop’s customer assurance platform helps tech companies seamlessly navigate the complexities of business insurance, regulatory compliance, and security automation in one place.
We provide a comprehensive suite of insurance coverage that includes General Liability, Technology Errors & Omissions, Cyber Liability, and Management Liability coupled with the most cost-effective SOC 2 compliance certification on the market.
Ready to learn more? Visit our website at https://www.koop.ai or drop us a note at hello@koop.ai.